TL;DR – And in the process asked some interesting questions.
The Budget debate has started. Unsurprisingly, the opposition, The Workers’ Party, doesn’t agree with the entire Budget. Specifically, Pritam Singh explained why the WP “is unable to support the announcement of a GST hike at this moment in time”.
Read his full speech here, or watch this video,
Here are four points from Mr Pritam’s speech that are worth considering.
1. About using more from our Net Investment Returns
Mr Pritam noted that there have been some discussions made for Net Investment Returns Contribution (NIRC) to be increased to 60% so that we don’t have to increase GST.
He also highlighted calls to consider only a temporary increase in NIRC to fund non-recurrent, lumpy infrastructure investments (e.g. High Speed Rail, new MRT lines and the Changi T5 terminal). After the completion of such infrastructure, the NIRC can return to 50% and a portion of the revenue earned from such infrastructure can also be returned to the reserves.
2. About using proceeds from land sales
Mr Pritam pointed out that the majority of land in Singapore are 99-year or less than 99-year leasehold properties. He suggested that current generations should be allowed to benefit from some percentage of today’s land sales because such land regenerates in value for future generations providing successive governments with a recurring source of income.
Mr Pritam also suggested that in order to prevent the Government from unnecessarily selling land to meet expenditure need, we can place a cap on spending revenue from land sales – for example, not more than 20% of the value of average land sales over 20 years, or 20% of land sales for that year, whichever is lower.
Interestingly, opposition politician, Goh Meng Seng, who was once a member of The Workers’ Party himself, criticised Mr Pritam for his clumsy attempt to explain and justify his idea.
3. Need more details about GST increase
Mr Pritam highlighted that there is a lack of clarity surrounding projected expenditure when the Government raises GST in future and the relative lack of information on whether there is scope for the reserves to better support Singaporeans.
He also pointed out that the Government had yet to reveal any information of a possible offset package for the low-income and middle-income should the GST be raised.
4. Taking a strategic perspective
Mr Pritam emphasised that not all proposals that seek to improve and suggest better social protection for Singaporeans is tantamount to raiding the reserves. Mr Pritam said that we should instead take a strategic perspective of our reserves position. This will allow the Government of the day more flexibility to budget for the needs of the current generations of elderly Singaporeans while leaving more scope to strengthen social protection for a current generation of Singaporeans.
Mr Pritam said,
“… take a strategic perspective of our reserves position – something only the Government can holistically do in view of the significant information asymmetries, look at the how quickly the world is changing and always assess how Singaporeans can be better protected ahead of time.”
Agree or disagree, it’s important to discuss alternatives
Just as some of us will disagree with the government’s position, some of us will not agree with what Mr Pritam said. However, it is important to be aware that there are alternatives and that we thoroughly discuss these alternatives. Given the technological disruption, there will be groups of people who will inadvertently lose out. Mr Pritam identified them as:
“Those who cannot be readily re-trained to assume higher value-added jobs. Those who may not be able to build new capabilities. Those who for example, cannot stand for too long and for whom job redesign is only catchphrase. And those who may not adapt to what they fear is a brave new world.”
Read about what the other WP MPs spoke about in their budget debate speeches here.
We need robust discussion and the willingness to slay sacred cows if we were to ensure that our growth is inclusive, even for those who cannot keep up with the increasingly rapid pace of disruption.