While the opposition has talked about the Government squirrel-ing away large sums of money in the reserves, Deputy Prime Minister Tharman Shanmugaratnam noted that the present generation is already benefiting from prudent budgeting done in the past.
For instance, investment income generated from government land sales proceeds in the reserves contributes to each year's Budget, he noted.
"This is not about saving money for great-great-great grandchildren - we're already benefiting from the money today because we have been prudent all along," said Mr Tharman at the People's Action Party East Coast GRC rally last night.
Mr Tharman, who is also the Finance Minister, said he was responding to several opposition parties' comments that "the Government is actually making a very large surplus and hiding it away in reserves".
The Singapore Government does not spend the money it earns from selling land, but instead puts it into the reserves, he said.
"This is simply prudent long-term budgeting... It means that we will draw continually on reserves every year."
The net investment returns contribution to this year's Budget came up to $9 billion, of which $4 billion can be attributed to accumulated surpluses that went into the reserves due to the sale of land over the years.
"Had we spent it before, we would not now have this $9 billion," Mr Tharman added.
"It is a way in which we are fair to today's generation, but make sure that this same fairness extends to our children's generation and for all future generations. Stick to prudent budgeting, it is fair."
Mr Tharman also refuted the notion that the Government makes "excess returns" on top of what it pays into Central Provident Fund (CPF) accounts, and stores this away in the reserves.
If Singapore's sovereign wealth fund GIC were only managing CPF monies, "it would not be investing long term and taking significant risks in order to earn high returns", he noted.
Instead, GIC would have to invest in a very safe portfolio because the interest on money in CPF accounts is guaranteed.
In addition to CPF monies, GIC is investing funds from land sales and many years of earlier government surpluses, Mr Tharman said.
The Government ran more than 30 years of budget surpluses until 2000 which, together with the sale of land, has given Singapore significant reserves, he added.
GIC can therefore invest long term and take higher risks for higher returns.
Up to half of the returns from investing past reserves may be used for current government spending under the Singapore Constitution.
"We are already benefiting today but we're doing it in a way that makes sure that future generations will get the same benefit," Mr Tharman said.
Chia Yan Min
