Lawrence Wong’s (LW) second Budget shows he can hold his own with his predecessors in misleading Parliament, disguising the Government’s true fiscal position and insulting Singaporeans with derisory levels of assistance relative to what should be an incredibly high level of reserves. At the same time the PAP use their control of state media to put out the fake narrative that this is a generous Budget.

LW says in his Budget statement that the drawdown on reserves between 2020 and 2022 had been successfully limited to $40 billion. This vindicates my own calculations of the expected deficit in 2020 of $35 billion and a surplus in 2021 even using the Government’s own very narrow and false definitions though I said that if we used a wider definition of Government to include our Sovereign Wealth Funds (SWFs) and shadowy state-owned companies like MOH Holdings the total deficit was probably much less. I called for POFMAs to be issued to both Tin Pei Ling and Heng Swee Keat for attempting to mislead Singaporeans into believing that the Government had spent $100 billion on supporting them during the first year of the pandemic (see here, here and here).

But LW goes on to tell lies and deliberately mislead Parliament. He says in his statement that in 2009 the Government spent $4 billion from the reserves though this was put back within 2 years. He then says:

“c. Our economy has recovered back to pre-COVID levels. But we
continue to be in a tight fiscal position.
d. It is therefore highly unlikely that we will be able to put back
what we have drawn from Past Reserves.“

The first claim, that the Government drew is demonstrably false since the Government’s own figures (publicly available on singstat.gov.sg) show that there was a cash surplus of $4 billion in 2009, not a deficit. However while that figure includes capital receipts and revenue from land sales, it does not include non-cash items, like revaluation gains and also the earnings of the SWFs and other state-owned companies.

My last blog, written on the eve of the Budget, compared the Government’s claimed lack of fiscal resources with its own figures of surpluses of at least $340 billion between 2005 and 2021. In the Budget, transfers from the consolidated revenue account (which should be identical with the cash surplus) were over $17 billion in 2022 and estimated to be $29 billion in 2023. Adding these to the figure of $340 billion produces total General Government surpluses expected to reach $386 billion by the end of 2023! This means that the drawdown in 2020 of some $35 billion will have already been repaid and more. In fact by the end of 2023 there will have been more than $20 billion put in than was drawn down. So Lawrence Wong is seriously misleading Parliament when he says that the money taken out during the pandemic is unlikely to be repaid.

Furthermore this is only a small fraction of the true picture as it only includes dividends and interest income received by the Government and does not include the surpluses in the wider public sector which should include GIC, Temasek, MAS, MOH Holdings, Changi Airport Group etc. The growth in the value of assets held by Temasek alone since 2004 amounted to $300 billion and the total including the other SWFs and state-owned companies could easily exceed $1-1.5 trillion.

Unless there is serious fraud or mismanagement and the statistics the Government produces and provides to the IMF are a pack of lies, there should be no need to make hard choices and this can by no stretch of the imagination be called a generous Budget. The apparently staggering level of reserves can be confirmed also by working backwards from the Net Investment Returns Contribution (NIRC). I did this in 2020 and my calculations based on the rules for relevant assets in the Constitution showed that the total net assets were probably around $2.6 trillion. In Budget 2023 the NIRC rises to $23 billion which indicates that the level of reserves held by GIC, Temasek and MAS could be between $1.5 trillion and $3 trillion (see here ). If we add on the amount held in endowments and trust funds given in the Statement of Assets and Liabilities net of the Government Securities Fund (which mainly represents money owed to Singaporeans by CPF) of $600 billion, we arrive at the truly staggering figure of total net assets of between $2.,1 trillion and $3.6 trillion. But even this immense sum is not all because the Government undoubtedly earns a return over and above what it pays to CPF holders. Since this is debt the net return over and above the cost of debt servicing can be considered as available for spending. If this earns conservatively 2% above the cost of servicing, then at least half of this or an additional sum of $10 billion (based on a Government Securities Fund of $970 billion) could and should be available for spending.

If we take 4% of the net assets figure (not unreasonable given the level of longer terms returns and particularly in a period of rising interest rates) and also at least 1% of the amount in the Securities Fund then the total available for spending would be between $100 billion and $160 billion instead of the miserly $23 billion NIRC figure. We could afford free healthcare, university education for citizens, enhanced old age pensions for seniors and expanded child benefits much more generous than the Government’s Baby Bonus . In fact the Reform Party has consistently advocated for all these since 2015 and questioned the Government over its claims that any more spending on the people is unaffordable.

Even the $23 billion is a sham since as I have repeatedly pointed out the Finance Minister ensures that most of this is allocated to Top Ups to Endowments and Trust Funds. In 2023 Lawrence Wong transferred nearly $17 billion from current spending using this mechanism. According to its figures the Government spends typically between 30-50% of this amount from endowments and trust funds, which is far less than the amount going in. Parliament, having agreed to allocate the money also has no control over this spending.

LW also increased subsidies for the purchase of HDB resale flats by another $30,000. More subsidies push up resale prices which allows the Government to charge HDB more for land on the grounds that it would be unfair to future generations for the land, which forms part of Past Reserves, to be sold at less than “market” price even though the very concept of a market when the Government has a monopoly of land and controls the supply is suspect. The Government then uses current spending to provide grants to HDB to cover the difference between what HDB has to pay for land and the fake “subsidised” prices of BTO flats. Payments for the land go directly to our SWFs, Temasek and GIC. This year the Government has allocated over $6 billion in grants to HDB and $7 billion in loans, of which the major part comes back to the Government when HDB pays for the land. As I have highlighted this is another disguised and hugely disingenuous way of making current spending look more generous than it is and of channelling resources away from Singaporeans to the SWFs (see here, here and here).

Instead of providing what the PAP misleadingly term “subsidies”, why not reduce the price of the land since the Government’s true cost is a fraction of the manipulated “market” price? If the amount HDB pays for land (which the PAP have refused to reveal since they came to power) is rightly deducted from the NIRC then together with the amounts allocated to Top Ups to Endowments and Trust Funds plus the revenue collected by MOH Holdings (not included in the Budget and hidden from the public) the net amount coming out of the SWFs as opposed to money going in is probably negative.

When we look at the figure for total revenue from land sales, which reached $17 billion in 2023, a one-third increase since 2022, much of which is to HDB, other statutory boards and state-owned companies, this further strengthens the argument that the Government uses the Budget to trick Singaporeans into thinking that they are receiving a net benefit from the SWFs. The reality is that year after year the PAP extract huge surpluses from Singaporeans whereupon they disappear into the SWFs and other state-owned entities never to be seen again.

LW also raised the limit for CPF from $6,000 to $8,000. This benefits the SWFs directly because positive balances are lent on to GIC, who use the money to earn a positive spread above the cost of debt, and indirectly because Singaporeans mainly use CPF for property purchases, which boosts prices in the resale market and justifies the Government charging higher prices for land to HDB. While it could be seen as fair for richer Singaporeans to also pay more CPF and benefit from the employers’ contribution, it still works as a regressive tax and tilts the cost advantage more in favour of foreign PMETs, whose employers do not have to pay CPF.For many Singaporeans the increase in salary deductions and reduction in disposable income will cause some hardship. When the Government Securities Fund is close to $1 trillion, it is difficult to see why it is necessary. One can only deduce that inflows into CPF are close to peaking and the Government wishes to postpone the date cash starts to flow out. This adds to the signals that all is not well with our SWFs. As I continually point out, here and elsewhere, the PAP are always searching for ways to ensure that no actual money comes out of the SWFs. Whether this is to hide serious liquidity problems or actual loses will not be known until there is a change of Government.

Despite the Government’s claims that this is a generous Budget the total social transfers to individuals only amounted to some $5 billion, about the same as in 2022. This is only slightly more than 20% of the NIRC. Together with spending from endowments and transfers going to individuals and special transfers, in 2022 this totalled only about $ 10 billion and will not be much more than this in 2023.

LW increased the Baby Bonus and the matching contribution which helps better off families more. He also retained the Working Mothers Child Relief (WMCR) while making it marginally less regressive by capping the total amount. Reform Party has long called out this tax break as unfair as it benefits higher income mothers much more and as demonstrating the Government’s continuing eugenicist beliefs that smarter (signalled by income) mothers should have more children than lower income mothers. Reform Party has continually called for this to be scrapped and the Baby Bonus rolled into a much more generous Child Benefit of between $300-$500 per month per child paid to mothers.

I have shown that the Budget monumentally fails Singaporeans and is a deliberate exercise in falsely concealing what should be a staggeringly high level of resources which should allow a much more generous level of support. Of total estimated spending of $104 billion ( which is inflated because a significant portion goes directly to our reserves through items like HDB grants) total transfers to Singaporeans are less than 10%. Meanwhile LW has increased regressive deductions like CPF and also taxes like GST. Furthermore he has lied to Parliament about the Government’s true financial position. The PAP’s arguments that the reserves (which appear to be continuing to grow at a rapid rate unless LHL and his Ministers are deliberately concealing massive losses and/or fraud) must be safeguarded for future generations do not add up when our total fertility rate has fallen so low because of a lack of Government support that the current generation of Singaporeans will die out. Despite LHL’s personal media monopoly’s attempts to convince you this is a generous Budget and that LW has done the best he can, show LHL and the PAP that you won’t be fooled any more. Give a thumbs down to Budget 2023, reject the PAP and demand a change of government that can finally get to the bottom of the mystery of where your money has gone. It is way past time to teach the PAP some hard truths.

Published by kjeyaretnam

I'm a Singaporean economist who became an opposition activist. I blog to provide an alternative to the porkies that the Pinkies tell. It just so happens that my alternative is the truth. That's why I've never been sued in any civil or criminal court no matter how hard hitting my criticism. I'm quoted and interviewed and asked to speak across the world but largely censored in Singapore in an effort to silence my political opinions. The left hate me because they think I split their vote and because I eschew their outmoded economic models. Models that don't work. The Right and the Conservatives hate me because I'm a liberal. I'm not sure what the middle think of me. I don't think there are more than a handful of people in the middle, here in Singapore. I'm a Singaporean born and bred, dual heritage, my parents Singaporean established here before the State of Singapore was created. I'm not Eurasian. I read economics at Cambridge and could be broadly described as from the Keynesian school but I believe in interventions. I was formerly a successful hedge fund manager. After economics and politics my greatest interests are history, film and Makan. I run but I run so I can eat like a Singaporean. View all posts by kjeyaretnam