SINGAPORE - The Singapore Government will be spending $5 billion more in this year's budget but will still achieve a $3.45 billion surplus - thanks to a run of high COE prices and the inclusion for the first time of investment returns from Temasek Holdings.
Just don't expect this to last, Finance Minister Heng Swee Keat warned in his Budget announcement on Thursday (March 24).
The Government's total spending for fiscal 2016 will go up by $5 billion or 7.3 per cent, to $73.4 billion from $68.4 billion a year ago.
But this will be more than offset by two things - Temasek's contribution and the Government's operating revenue rising by $4.28 billion, or 6.7 per cent, to $68.4 billion.
The main contributors to the higher revenue were $1.45 billion more from statutory boards, $1 billion more from personal income taxes and $1.14 billion from motor vehicle taxes (here's where your COE or Certificate of Entitlement money went).
With Temasek's inclusion, the projected Net Investment Returns (NIR) for fiscal 2016 will almost double (up 48.6 per cent) to $14.7 billion from last year's $9.9 billion.
The NIR framework was implemented in 2009 to allow the government to spend up to 50 per cent of the expected long-term real returns on its net assets managed by the Monetary Authority of Singapore (MAS) and GIC - and now, Temasek.
Temasek's inclusion, said Mr Heng, will be a source of revenue for the long term. But he cautioned that some of the increase in operating revenue for 2016 came from "one-off factors which we do not expect to be sustained" - a nod to COE prices being expected to decline in the next one to two years as the economy slows.
Mr Heng went on to warn that "the longer term picture will grow more challenging as we expect expenditure needs to grow faster than revenues".
Of comfort though is that total spending on Budget 2016 is 17.9 per cent of Singapore's gross domestic product or GDP, still low by developed country standards. OECD data shows Singapore's peers tend to spend around 40 per cent to 50 per cent of their GDP.