Using past reserves: Tharman tells why swift action was needed
By
Jeremy Au Yong, Political Correspondent
ST PHOTO: MUGILAN RAJASEGERAN
PARLIAMENT learnt yesterday what steps the Government took to obtain the President's consent for what will be the first-ever draw on the nation's past reserves.
It started with Prime Minister Lee Hsien Loong broaching the subject informally with President S R Nathan, before Cabinet had approved the Budget proposals.
This was followed by a string of detailed briefings from various ministries after Cabinet approval, before a formal proposal was put up to the President.
In all, the process took one week.
The approvals had to be obtained quickly for two reasons, said Finance Minister Tharman Shanmugaratnam, retracing the key steps of the approval process.
First, the Budget had been brought forward by a month.
Next, the shifting economic environment meant that the size and shape of the Budget proposals had to be refined up to the last minute.
According to the Constitution, Singapore's national reserves can only be used if two parties give consent - one is the Government of the day, the other is the Elected President. Hence, there are 'two keys' to the reserves.
The Government is now asking for approval to use $4.9 billion from the reserves to fund one-off measures to boost the economy, including the $4.5 billion Jobs Credit scheme.
It said two weeks ago that the President had already given in-principle approval for this.
Speaking yesterday in Parliament, Mr Tharman answered questions MPs had posed about the robustness of the approval process.
'Did the President have full opportunity to properly evaluate the proposal, or was it a fait accompli?' he said.
Explaining the process step-by-step, he said that Cabinet approved the proposal to draw on the reserves to fund the Jobs Credit scheme and the Special Risk-Sharing Initiative to free up bank lending one week before the Budget.
But even before the Cabinet approved the move, PM Lee discussed the matter informally with the President to 'sound him out and to give him more time to think over the matter'.
After the Cabinet decision, detailed briefings were given to the President and his Council of Presidential Advisers (CPA) by the Ministry of Trade and Industry, the Ministry of Manpower, the Ministry of Finance and the Monetary Authority of Singapore.
'We addressed the President and CPA's questions and clarifications on all relevant matters,' said Mr Tharman.
'We also briefed the President and the CPA on the possible scenarios that might require our accumulated savings or past reserves in the next few years and the contingency measures that might be necessary,' he added.
'These included justifying the draw on past reserves before exhausting current savings.'
Once the Government had finalised the costs for the two schemes, it sent a formal request to the President.
'The President and CPA were able to form their views in advance of this final submission because they had been thoroughly briefed,' said Mr Tharman.
The President's formal approval will be sought once Parliament passes the Supply Bill, he added.
The explanation of the approval process came as the Minister wrapped up the three-day debate on the Budget Statement.
Mr Low Thia Khiang (Hougang) was among those who quizzed the Finance Minister on his account. The opposition MP asked if the system was such that the two keys operated in tandem.
'When the Government key says unlock, the other key unlocks automatically,' he said.
Mr Tharman dismissed this notion.
'This is not a wayang,' he said. 'This is about a government that in the exigencies of the circumstances had to craft, within a short period of time, major measures...had to then approach the President and the CPA, provide full information, arguments for why we felt it was necessary to do this now...and they had to make their evaluation.'
Mr Inderjit Singh (Ang Mo Kio GRC) also asked what the President's deliberations were.
'If we could get a sense of what they discussed and what process they went through, then that may clear many of these questions,' he said.
To this, Mr Tharman replied that he was not sure the details of the President's process were relevant.
'This is a system that relies on trust in the individuals who are in charge,' he said. 'Do you trust them? Have they made decisions wisely? Has the Government been acting responsibly? That is ultimately what has been and will be the strength of the system.'
He added that other systems 'based on transparency of figures and procedures', as distinct from trust in the individuals, have been shown to shift towards 'wanting to spend more reserves for less and less meritorious purposes over time'.
'That is what we want to resist,' said Mr Tharman.
