In his speech to the PAP Conference on 27th November,
PM Lee said that Singaporeans could expect a good Budget because
government revenues had been better than expected.
The Reform Party is not surprised by this. The
real question is why Singaporeans have not benefited for so many
years from excessive government surpluses all these
years.
The way the Budget is presented makes it difficult to
discover what the true state of government finances
are. The Finance Minister first reports what is
called the primary balance which is the difference between
operating revenue (the amount raised in taxes and user fees) on the
one hand and the sum of operating expenditures and development
expenditures on the other.
The Minister then adjusts this balance for special transfers
(the main item is GST credits) including top-ups to endowments and
trust funds. This results in what is called the basic balance
before the net investment returns contribution is added in.
The net investment returns contribution is up to half of Temasek
and GIC’s income in any year. Again we are not told the
exact percentage and any capital gains (or losses) on their
portfolios are not included. After adding this in Minister
Tharman forecast a deficit of about 1.1% of GDP for 2010.
The question is whether this is in any sense a meaningful
indicator of the government’s fiscal position. Since the primary
balance does not include interest income, investment income and
capital grants yet includes development expenditure, the Reform
Party contends that it clearly is not.
The Yearbook of Statistics 2010 shows that the general
government surplus (which is more comprehensive than the government
surplus since it includes extra-budgetary amounts) was $18 billion
in 2005 and 2006, $35 billion in 2007 and $22 billion in 2008. In
2009 the government deficit (the general government figure was not
available) was $4 billion but according to the Monthly Digest of
Statistics for November 2010 this has been reversed this year and
up to October the surplus was about $16 billion for the first six
months. If one could crudely extrapolate from that then one might
expect the total surplus for the year to be around $32 billion. To
arrive at a rough estimate as to what this means for the ordinary
Singaporean, if I divide the surplus by the number of Singapore
citizens (roughly 3.2 million as of June 2010) then that gives a
figure of $10,000 which could theoretically be distributed to every
Singaporean man, woman and child without reducing the Government’s
net asset position. And do not forget that is not just a
one-off windfall. A similar sum could have been
distributed in every year except 2009.
In fact the government’s statement of assets and liabilities as
at 31st March 2009 shows a net asset position of over
$300 billion (if it is assumed that the entire Government
Securities Fund is a liability to bond-holders). And that
would appear to be before two important elements:
Singaporeans have learnt to expect that in an election year
there will be some exceptional transfer payments and tax credits
(which will be subsequently more than clawed back through increases
But what my analysis highlights is just how generous the
Government can afford to be. Or to put it another way how much
higher both consumption and investment could have been if the
government had aimed to balance its budget rather than run
surpluses close to 10% (and sometimes considerably more than
10%) of GDP in most years . Furthermore this surplus does not
take account of:
The Reform Party would like to know why there is such a
lack of transparency in the budgetary process and it is so
difficult to get information as to the government’s true fiscal
position.
Furthermore we want to know why the PAP always talks
about the danger of bankrupting Singapore and no money being
available to fund investment in our people when in fact the
government’s net asset position is so inefficiently large. The
Reform Party is a liberal free market party and not a socialist
party. We believe that these assets can be put to much more
productive use if they are in the hand of the private sector. In
addition we believe better returns can be earned by investing more
in our people than can be earned in low-yielding foreign government
securities. Therefore we want to see:
We will have no difficulty in answering the question we are
frequently asked, “How do you intend to pay for this?”
So the Reform Party calls upon Singaporeans not to be deceived
by the usual hand-outs that will come with next year’s Pre-Election
Budget. Not even if these amount to several thousand dollars,
as is entirely possible. You are being short-changed.
PM Lee said at his speech that “Provided Singaporeans
support the Government and its plans, we can do it. We will make
this one of the best countries in the world to live, work, bring up
families and retire in.”
Don’t be fooled. Despite so many years of record
surpluses, the PAP has failed to raise the living standards of the
median Singaporean significantly since 1997. We can do better for
you. Support the Reform Party and take your country
back!
Taken from Reform Party Blog
http://votingrp.wordpress.com/
