$15.3b in special transfers to S'poreans: Estimates Committee urges funding sustainability and encouraging SMEs uptake of tech, R&D

A committee of MPs has called on the Government to ensure the sustainability of such special transfers.
A committee of MPs has called on the Government to ensure the sustainability of such special transfers.ST PHOTO: ONG WEE JIN

SINGAPORE - A total of $15.3 billion was set aside under Budget 2019 for special transfers to meet the current and future needs of Singaporeans. Such transfers include top-ups to endowments and trust funds.

This figure was revealed on Thursday (Nov 14) in a report by a committee of MPs tasked with examining government spending. They called on the Government to ensure the sustainability of such transfers to meet competing needs of Singaporeans across different generations.

Of the $15.3 billion, $6.1 billion went to the Merdeka Generation Fund, which provides financial and other support to those born between 1950 and 1959; and $5.08 billion to the Long Term Care Support Fund, which supports measures like CareShield Life subsidies and the Elderfund assistance scheme.

The rest went to businesses and households, like the one-off SG Bonus that was announced in 2018 to share the fruits of the country's development with Singaporeans.

The eight-member Estimates Committee gave this update on Thursday in its 55-page report. Set up by Parliament, the committee considers the Government's Budget and reports on any savings that may be made.

In its report, the committee also examined the $19 billion set aside under Research, Innovation and Enterprise 2020 (RIE 2020), a five year plan to build the Republic as a global node of technology, innovation and enterprise.

Noting the "significant amount" of special transfers, committee chairman and West Coast GRC MP Foo Mee Har said: "The committee urged the Government to explore ways to find the right financing solution to fund programmes, balancing competing needs of Singaporeans across generations as well as ensuring the healthcare needs of new cohorts beyond Pioneer and Merdeka generations would receive similar support."

The committee also asked the Ministry of Finance (MOF) if there was any relationship between special transfers and budget surpluses.

In reply, MOF said the timing and amount of special transfers are based on considerations like the Government's long-term plans and economic and social needs.


Such transfers could even increase in times of budget deficit, it said.

It cited how, despite a budget deficit of $0.8 billion during the global financial crisis in 2009, a $4.5 billion Jobs Credit scheme was introduced to encourage businesses to preserve jobs.

While the ministry expected baseline healthcare spending to climb, given a rapidly ageing population and more prevalent chronic diseases, it said the Government would meet the increase in recurrent expenditure with recurrent revenue - such as from the hike in the goods and services tax (GST) from 7 per cent to 9 per cent, which will take place some time between 2021 and 2025.

This will go towards providing subsidies to the elderly, building new capacity and investing in new medical technologies to improve care quality.

The committee also questioned MOF on the use of government debt to finance long-term infrastructure projects such as those that protect Singapore against climate change.

MOF said the Government will have safeguards to ensure that the debt, and its interest and repayment, are sustainable and in line with the reserves protection framework.

In a similar question last year, the committee had queried MOF on the cost breakdown of the Changi East development, which involves the building of Changi Airport Terminal 5 (T5), noting that the Government had already sunk more than $9 billion into it.

MOF did not provide cost estimates then as it was still in the planning and design phase. T5 is slated to open around 2030.

As for the $19 billion set aside under RIE2020, the committee said the Government should exercise "strong discipline in extracting value from R&D and RIE investments".

"This includes the development of a comprehensive set of analytics, to set key performance indicators and inform value and outcomes," said Ms Foo.

The committee noted that 50 of Singapore's large local enterprises contributed to only about 15 per cent of business expenditure on research and development (Berd) in Singapore in 2017.

It said it seemed that leading companies here may not be adopting research and development as aggressively as their foreign counterparts, and that R&D efforts seemed more fragmented here.

It called on the Government to better understand what it takes for "national unicorns" - companies valued above US$1 billion - to emerge and become globally competitive.

The committee acknowledged MOF's explanation that cross-country comparisons on Berd were not always appropriate due to the different industry mix and economic context. But more could be done to push for the uptake of technology and R&D by local companies, it said.

On this front, it noted that 1,000 small and medium-sized enterprises have benefited from the Centres of Innovation (COIs) launched in 2006 to help SMEs develop and test technology products. Over a third of these companies engaged the COIs more than once.

Two new COIs for aquaculture in Temasek Polytechnic and for energy in Nanyang Technological University were announced during the Budget this year.

But the COI programme needs to gain more traction as uptake has been limited, the committee said, reflecting the observations made by the Singapore Business Federation (SBF).

"Local SMEs were unaware of new technologies, lacked the capabilities or resources to absorb and deploy them, or to further commercialise upstream intellectual property into downstream products and services," SBF had shared in feedback to the committee.

The committee urged the Government to consider SBF's proposals, such as increasing its outreach activities to engage SMEs to tap the COIs, and reducing the level of bureaucracy among government agencies so as to unlock value for companies here.

The committee comprises seven People's Action Party MPs and Workers' Party Non-Constituency MP Daniel Goh.