Feb 1, 2009
Not breaking piggy bank
THE Government is not 'breaking the piggy bank' even as it is dips into its past reserves - for the first time - to help fund a record $20.5 billion spending plan, said Senior Minister Goh Chok Tong on Sunday.
'To break the piggy bank is to allow all the notes and coins to spill out, with no controls over how much is spent. We are not doing that,' he told his Marine Parade constituents at a Chinese New Year celebration lunch.
While Mr Goh said the Government had to take this unprecedented step of seeking the President's approval to use a small portion of Singapore's past reserves to tackle its worst-ever recession, he emphasised that 'our reserves must continue to be protected.'
'We must continue to exercise great discipline and not dip into our reserves at the first sign of difficulties. We should tap it only as a last resort and when there are compelling reasons,' he said.
SM Goh said he he favours putting up three 'No' signs when drawing on the reserves.
First, no use of the reserves to support social assistance programmes.
As a general principle, the Government must continue to fund such programmes out of revenues raised in the current term of government, not past reserves, said Mr Goh.
Second, no draw for permanent programmes. Such programmes like Workfare and ComCare, no matter how meritorious, should be funded by current revenues and reserves.
Third, no draw except under dire circumstances when one-off extraordinary measures are required to ward off catastrophe or prevent irreparable damage to the economy.
Taking pains to drive home the point, he reiterated: 'When this economic recession is over, we must continue our policy of growing our reserves by living within our means and running a modest budget surplus. As the present situation shows, our reserves are the best insurance for our own and our children's future.
'Use them wisely and sparingly. Never break the piggy bank.'
The President has given his in-principle approval to a Government's request to draw $4.9 billion from reserves accumulated before its current term of office.
The money is to fund two measures aimed at saving jobs and keeping businesses afloat in this downturn.
It is doing so even though it has built up sufficient savings during its current term, which began in 2006, in order to have 'full flexibility' to respond to the current economic crisis, Finance Minister Tharman Shanmugaratnam said in his Budget statement on Jan 22.
Also, the two 'extraordinary' measures the draw will pay for are temporary and will not be built into longer-term government programmes, and should therefore be separately funded, he said.
The two measures are the Jobs Credit scheme which subsidises employers' wage bills to the tune of some $4.5 billion, and the Special Risk-Sharing Initiative which will help viable mid-sized companies get access to credit.
Mr Tharman had said that Singapore's past reserves were 'substantial' and 'well in excess of our liabilities'.
The Government has never disclosed the full extent of these reserves. Past estimates by analysts have ranged from $300 billion to $600 billion.
This is the second time the Government had gone to President Nathan. In October last year, it sought his approval for a $150 billion guarantee on all bank deposits here to be backed by past reserves.
During the Asian financial crisis in 1998, for instance, when the economy grew by just 1.5 per cent, Mr Goh, then-Prime Minister, had dismissed suggestions that the reserves be drawn on.
He said then: 'Once foolishly spent, they will be most difficult to build up again. As your trustee responsible for these reserves, I am honour-bound to protect them. We must not fritter them away, whatever the pressures we face.'
In his Sunday speech at the Marine Parade constituency lunch, SM Goh said after Mr Tharman's budget speech, a former Ambassador to Singapore recently teased him that Singapore was finally 'breaking the piggy bank!'
'I promptly corrected him. To break the piggy bank is to allow all the notes and coins to spill out, with no controls over how much is spent. We are not doing that,' he said.
'In this instance, before approaching the President, the Minister for Finance had first to convince the Prime Minister. They then had to convince the Cabinet. After that, the Government had to convince the President to use his second key to unlock the safe.
yadda yadda... The rest of it is here...
The question is:
Are people really concerned whether the piggybank will be broken? (incidentally S$5 billion withdrawn, as compared to US$24 billion thrown into rescuing western banks hahaha)
Or how the miserly S$5 billion is really benefitting workers or businesses?