Budget debate

Budget prudent, but watch spending, say MPs

Call comes as govt expenditure is set to rise with maturing economy, ageing population

The Budget is back in the black this year after a deficit in the last fiscal year, but Members of Parliament yesterday repeated their calls for cautious spending, warning that expenditure is likely to rise in the future.

These calls came from at least 10 out of the 26 MPs who spoke in yesterday's debate on the Budget delivered by Finance Minister Heng Swee Keat last month.

While they lauded the Budget for being prudent and forward- looking, they also expressed concerns that the healthy balance sheet, which projects a surplus of $3.45 billion, could inflate expectations among Singaporeans for more spending in the future.

At least three MPs - Mr Chong Kee Hiong (Bishan-Toa Payoh GRC), Ms Foo Mee Har (West Coast GRC) and Mr Alex Yam (Marsiling-Yew Tee GRC) - said that government spending will likely increase in the future, given the maturing economy and greying population.

And while public finances remain healthy, Mr Chong said, expenditure on social development has been outpacing revenue growth.

CAN'T BE COMPLACENT

If we think we are safe and invulnerable because of the size of our bank balance and therefore can and should draw down on it to make our lives 'easier' or 'better', we are simply deluding ourselves.

MR SITOH YIH PIN (POTONG PASIR)

Mr Yam, noting that total spending for this fiscal year is projected to be $5 billion more than for last year, said he hopes that Singapore "does not reach the stage where we develop the habit of giving out fish, rather than teaching people how to fish".

Budget measures announced this year included schemes to help needy and elderly Singaporeans as well as business-centric policies to help small and medium-sized enterprises amid a slowing economy.

Some MPs were concerned that the support schemes and subsidies to industries may become increasingly institutionalised.

Mr Vikram Nair (Sembawang GRC) warned that they would add to the fiscal burden of the country and to the strain on future generations, as he called for "creative ways to fund government spending and schemes".

Commenting on the surplus in this year's Budget, Mr Liang Eng Hwa (Holland-Bukit Timah GRC) noted that it was largely due to the inclusion of Singapore investment company Temasek Holdings under the net investment returns framework for the first time this year.

Under the framework, the Government can spend up to half of the long-term expected real returns on investments by GIC, the Monetary Authority of Singapore and now Temasek.

But given the uncertain economic climate, "there is no guarantee that expected long-term returns would not fall in the years to come", said Mr Liang, who is chairman of the Government Parliamentary Committee for Finance and Trade and Industry.

Therefore, several MPs said, the traits of thrift and prudence that have underlined fiscal policy since independence are just as relevant now.

As expenditure goes up, the challenge is to identify what the "must haves" are and prioritise spending on them, as opposed to the "good to haves", said Mr Sitoh Yih Pin (Potong Pasir).

"If we think we are safe and invulnerable because of the size of our bank balance and therefore can and should draw down on it to make our lives 'easier' or 'better', we are simply deluding ourselves."

Nominated MP Randolph Tan also sounded a dire warning against "unrestrained profligacy".

The labour economist said: "Just as natural resource endowments can be readily depleted, later generations of Singaporeans can easily end up with a vacuous foundation on which to erect their future economy if our economic philosophy shifts."

One way to guard against this is to make sure money is well spent, said Ms Foo.

She suggested monitoring the outcomes of such "big-ticket investments" as the $4.5 billion Industry Transformation Programme and the SkillsFuture scheme to promote lifelong learning, which will cost more than $1 billion a year from now to 2020, to make sure they achieve their objectives.

A version of this article appeared in the print edition of The Straits Times on April 05, 2016, with the headline 'Budget prudent, but watch spending, say MPs'. Print Edition | Subscribe