Budget 2019 debate

Unexpected Budget surpluses due mostly to volatilities: Heng Swee Keat

The unexpected surpluses which the Government has accumulated in the past few years are due mostly to "volatilities and uncertainties in revenues and expenditures", Finance Minister Heng Swee Keat said yesterday.

They are not due to the introduction of Temasek into the Net Investment Returns Contribution (NIRC) framework, Mr Heng said in response to Workers' Party chief Pritam Singh (Aljunied GRC) suggesting earlier this was the case.

Mr Singh, in exploring ways to fund a permanent and universal senior citizen healthcare package on Tuesday, cited the addition of Temasek into the NIRC since 2016, saying this explained the "healthy accumulated surplus" accrued in the current term of government.

Mr Heng, in his wrap-up of the 2019 Budget debate, said this was not the case. Rather, it was the volatilities and uncertainties in revenues and expenditures that accounted for most of the surplus.

He pointed out that forecasting is an inherently difficult exercise, and some revenue items are volatile, especially those dependent on sentiment-driven markets such as stamp duty or vehicle quota premiums.

For instance, in the 2018 financial year ending March 31 this year, the Government had estimated stamp duty collections would be lower because of property market cooling measures. But the property market defied expectations, he added.

On the expenditure side, there can also be surprises, Mr Heng said, referring to the two-year suspension of the Kuala Lumpur-Singapore High-Speed Rail project.

These factors contributed to an overall Budget surplus of $2.1 billion projected for FY2018, a $2.7 billion increase from the $600 million deficit that was forecast a year ago.


Mr Heng said: "While the Go-vernment's approach is to look ahead, plan ahead and prepare for the unexpected, it seems that Mr Singh would prefer to look backwards to find unexpected revenue surprises and count on them to keep happening.

"I am afraid such an approach of hoping for the best is not how we secure Singapore's future."

Mr Heng said that while there is room for improvement, the accuracy of the Government's revenue and expenditure projections has been reasonable, and respectable by international standards.

Actual revenue and expenditure figures have generally been within plus or minus 4 per cent of original estimates, he noted.

He also replied to Mr Singh's question two days ago about how borrowing will impact revenues available for future recurrent spending.

Clarifying that it does not, Mr Heng said: "Borrowing does not create new revenues for recurrent spending. It merely converts a concentrated lump of spending in a few years into a smoother stream of loan repayment with interest. And we must have every intention to pay back what we borrow."

He added: "In fact, it is irresponsible for a government to borrow to spend on recurrent needs such as healthcare and security. Such borrowing shifts the burden of paying for today's needs onto future generations."

A version of this article appeared in the print edition of The Straits Times on March 01, 2019, with the headline 'Unexpected Budget surpluses due mostly to volatilities: Heng'. Print Edition | Subscribe