SINGAPORE: A constitutional change to make Temasek Holdings a bigger contributor to the Singapore Government's income was passed on Monday (Jul 13).
The Constitution of the Republic of Singapore (Amendment) Bill will allow the Government to include Temasek as a contributor to the Net Investment Returns (NIR) framework as Singapore seeks to make investments in healthcare, human capital and transport infrastructure in the coming years.
Speaking in Parliament, Deputy Prime Minister Tharman Shanmugaratnam said: "Including Temasek in the NIR framework will provide the Government with additional fiscal resources in the years to come. We estimate that it will increase the total NIR contribution to the Budget, from about 2 per cent of GDP under today’s framework to about 3 per cent on average over the next five years under the enhanced framework."
"The big drivers of the Budget are healthcare capacity because of an ageing population, transport investments and investing in our human capital; in Singaporeans themselves because that’s the source of our strength of our society and our economy,” he added.
During the debate, several Members of Parliament (MPs) asked whether the inclusion under the NIR framework would influence Temasek's investment strategy. They also noted with concern how the Government has been increasing its spending.
Ms Foo Mee Har, MP for West Coast GRC, said: "As we enter an era of increasing spending and diminished growth, the net investment returns contribution will be a welcome source of revenue. We are fortunate to have the nation’s reserves, but must continue on the path of prudence and sustainability, for the sake of future generations.
"Ultimately, the focus must be on building a strong and globally competitive economy that will continue to generate strong operating revenues to meet increasing demands for expenditure."
Addressing these concerns, Mr Tharman said the NIR framework does not set target rates of return and entities will have to adhere to their own investment mandates. On the topic of fiscal conservatism, he reiterated the Government's aim to spending wisely "for today and tomorrow" and to "guard against an inexorable amount of spending".
"We must never lose the values of fiscal conservatism and the sense of obligation to both current and future generations that our pioneer leaders have bestowed on us," he said.