PM’s speech in Parliament: Social safety nets

Social safety nets should be paid for out of current revenues

Prime Minister Lee Hsien Loong said after generations of frugal prudence, Singapore has built up significant reserves.
Prime Minister Lee Hsien Loong said after generations of frugal prudence, Singapore has built up significant reserves.PHOTO: ST FILE

One all-important requirement when formulating new social support schemes is to keep programmes fiscally sustainable, Prime Minister Lee Hsien Loong said yesterday.

He also stressed that Singapore's social safety nets should be paid for out of current revenues as a matter of principle. "We should not draw down on what we have inherited, nor should we mortgage the future of our children," he said, on the third day of debate in Parliament on the President's Address.

After several generations of frugal prudence, Singapore has managed to build up significant reserves, he noted.

"Now the opposition says, show me how much we have in the reserves before I decide whether I support your Budget and tax plans. Let's have a look at the money.

"Basically, they're asking, I have something in the bank already. How much of that can I touch?" said PM Lee.

Such an attitude held by the opposition is "fundamentally the wrong approach", he added.

Singapore's founding generation, when building up the nation's reserves, had never asked themselves whether they had too much savings, he said. "We were in our early days of nationhood, things were so uncertain and no one knew what the next day would bring.

"Compared to today's wages then, incomes then were low, but it was never a question of how much reserves would be enough," he added. Rather, the question was whether Singapore could steadily squirrel away a bit more in its reserves year after year, decade after decade as protection for a rainy day.

There can be no good answer to the question of how much reserves is enough, or too much, he said.

"The future is unknowable. We have no way to tell what may hit us from out of the blue," he added, pointing to how the past nine months have played out.

In January, before the Covid-19 crisis hit Singapore, the Finance Ministry had been preparing the 2020 Budget.

 
 
 

He recalled the Government then was confident it could meet its current commitments and set aside funds for the long term, and had expected to have something left at the end of the term of government to add to past reserves.

"But just a few months after that, we are down more than $70 billion and we have had to draw heavily on past reserves to fund four, five Budget packages," he said.

Singapore was able to build up significant reserves due to several generations of frugal prudence, and in the face of "this enormous monster storm, we've been able to draw on (the) reserves and fund our essential Budget packages and help people on a very big scale".

Singaporeans, therefore, should not think of themselves as "inheritors spending what we have been lucky enough to be endowed with".

 
 
 

They should see themselves as founders for the future generations, PM Lee added.

"Let us not think of touching them in normal times." They are Singapore's rainy day fund, he said.

"That is the way to build Singapore for the long term and secure the future for our children and grandchildren."

A version of this article appeared in the print edition of The Straits Times on September 03, 2020, with the headline 'Social safety nets should be paid for out of current revenues'. Print Edition | Subscribe