Budget debate: Grow reserves at a slower pace to invest in Singaporeans, says WP's Leon Perera

Singapore may even save on new spending on social safety nets later if more fiscal resources are successfully used to help people and companies become more creative, resilient, innovative and entrepreneurial, Workers' Party Non-constituency MP Leon P
Singapore may even save on new spending on social safety nets later if more fiscal resources are successfully used to help people and companies become more creative, resilient, innovative and entrepreneurial, Workers' Party Non-constituency MP Leon Perera said.ST PHOTO: LIM YAOHUI

SINGAPORE - Growing Singapore's reserves at a slower rate could provide more funds to be invested in Singaporeans and companies in the longer-term, said Workers' Party (WP) Non-Constituency MP Leon Perera in Parliament on Thursday (Jan 27).

Singapore may even save on new spending on social safety nets later if more fiscal resources are successfully used to help people and companies become more creative, resilient, innovative and entrepreneurial, he said during the debate on the Budget statement.

The country's reserves has been estimated to exceed $1 trillion.

Mr Perera said it is a good thing that Singapore has large reserves yielding net investment returns that make up the largest revenue stream for the Government.

Many countries, he noted, do not have reserves that can be drawn down in emergencies. They also have high levels of fiscal debt relative to their gross domestic product (GDP).

But, he argued, it is also possible to be "too prudent". This could lead to a failure to seize opportunities to develop the capabilities of Singaporeans for the future, he said.

"Clearly, we have to find the Goldilocks zone between these two extremes," Mr Perera said.

"An analogy from the business world might be the two extremes of spending too much and running into a cash crunch, on the one hand, and not investing enough in the company to develop the capabilities of the employees, new business strategies, and intellectual property on the other."

He stressed his suggestion was not to draw down on the reserves at this point.

 
 
 
 

"Let us bear in mind that during the worst global economic crisis the world had ever seen since the Great Depression of the 1930s, the global financial crisis of 2008, we drew down only a tiny fraction of the reserves," he said.

But he questioned if the reserves should always "go up and up at the same rate".

"Can we not have reasonable conversations about how to vary the slope of reserves growth while agreeing that the principal should only be drawn down in an emergency?

"In doing that, we can invest in our people and our companies so as to help them become the most creative, the most resilient, the most innovative and the most entrepreneurial that they can possibly be, so that they can deal with any challenges the world can throw at us with confidence."

Such a move may even raise Singapore's GDP and tax revenue, which are good fiscal outcomes, he added.

This would be akin to spending more to make vaccines free or close to free, which may have the effect of reducing state spending on hospital subsidies and Medifund further downstream, Mr Perera said.