Singapore has a strong system of budgetary safeguards and does not need an independent watchdog to monitor government finances, said Senior Minister of State for Finance Indranee Rajah yesterday.
She was replying, at the debate on the Ministry of Finance's budget, to a suggestion by Workers' Party chief Low Thia Khiang (Aljunied GRC) that Singapore set up an independent Office for Budget Responsibility(OBR), similar to Britain's.
Mr Low said such an institution "will enhance public confidence" in government spending and could provide useful advice to the elected president in his role as the second key to the reserves.
Ms Indranee told Parliament: "In determining whether to adopt institutions similar to those elsewhere, it is also important to understand the context in which those institutions were established."
The OBR was set up in Britain in 2010, when a new coalition government had just taken over after the general election.
The new administration was burdened by a huge deficit inherited from the previous government. In addition, there was little confidence in government economic and fiscal planning, she added.
In Singapore, "our situation is very different. Our Government has a strong track record of sound finances", said Ms Indranee. "While many other countries are in a net debt position, we have consistently spent within our means and achieved a balanced budget in each successive term of government."
The Government has also consistently planned ahead, she noted. For instance, the Finance Minister said in his Budget speech this year that the Government is reviewing measures to raise revenue in order to meet growing long-term healthcare and infrastructure needs.
Singapore's Constitution also outlines a strong system of rules and safeguards to ensure government spending remains sustainable.
The Government is required to seek Parliament's approval for its expenditures during each year's Budget. In addition, the President may veto the Budget if he is of the opinion it is likely to draw on past reserves, said Ms Indranee. "This effectively instils discipline for the Government to achieve a balanced budget over each term of office."
The net result, she said, "is that markets have confidence in our system... This can also be seen from the fact that we are among the few countries today that continue to enjoy an AAA credit rating."
NMP Randolph Tan asked about potentially lower corporate income tax rates in the United States and the impact this will have on Singapore's competitiveness.
Singapore has to be mindful of income tax changes in other countries, Second Minister for Finance Lawrence Wong said in response.
Corporate income tax rates have been falling around the world and some countries have announced plans to further cut these rates.
Singapore's 17 per cent corporate income tax rate is still competitive internationally, he said. "We will continue to monitor the trends and ensure that our tax system remains competitive and pro-growth."
In addition, Singapore's competitiveness is not based on taxes alone.
"We compete on many other factors - our quality workforce, rule of law, good corporate governance and infrastructure," Mr Wong said.