'Bogus allegations' about government expenditure: Indranee in rebuttal to NCMP Leong Mun Wai's motion

SINGAPORE: Non-Constituency Member of Parliament (NCMP) Leong Mun Wai’s adjournment motion included “bogus allegations” about how the Government manages public funds, said Second Minister for Finance and National Development Indranee Rajah in Parliament on Monday (Oct 3).

Mr Leong, the NCMP from Progress Singapore Party, had questioned the financial reasoning behind the Government’s decision to provide funding support for SPH Media Trust and the cost involved in taking over the ownership and management of Sports Hub.

He described them in his speech for the adjournment motion as “two significant outlays of taxpayer's money”, and reminders of the need to ensure “better oversight of public expenditures”.

The Government has said it will provide up to S$900 million in funding support for SPH Media Trust over the next five years, after media operations of Singapore Press Holdings (SPH) were hived off last year to form a not-for-profit entity.

On terminating the public-private partnership (PPP) for the Sports Hub, authorities have said a large portion of its costs - about S$1.5 billion - will be the amount paid to Sports Hub Pte Ltd (SHPL), the private consortium that was previously running the sports facility, for the termination. This amount comprises S$300 million for the fair market value of Sports Hub and S$1.2 billion that can be understood as the capital expenditure the Government would have had to bear if it adopted the traditional procurement approach from the start.

“This is a total of S$2.4 billion of taxpayer's money,” said Mr Leong, adding that the Government “owes Singaporeans a more detailed explanation”.

“The Government must respond in full to my queries or Singaporeans can take it that taxpayer’s money has been wasted,” he said.

In her response, Ms Indranee described the NCMP’s allegations about the Government’s management of public expenditure and objections to the transactions involving Sports Hub and SPH Media Trust as “completely without basis”. 

She noted that the Government has responded “in full many times” on these two issues.

“Mr Leong’s entire motion is an attempt to portray the Government as profligate and heedless of our expenses. Nothing could be further from the truth,” she said.

“In persisting with these insinuations, Mr Leong is doing a disservice to Singapore, to our Government and to our public servants, charged with the sacred responsibility of looking after the public purse.”

A WASTE OF TAXPAYERS’ MONEY: LEONG MUN WAI

Mr Leong said in his near 20-minute-long speech that the restructuring deal involving SPH is “questionable”, as the company's shareholders “should have left behind a larger share of (its) property assets to support” the operations of SPH Media Trust.

These assets include shopping malls such as Paragon, which were acquired by SPH using profits from its print media business previously, he noted. These non-media assets have since been sold to Cuscaden Peak – a consortium comprising tycoon Ong Beng Seng’s Hotel Properties and two Temasek-linked entities – for S$3.9 billion after the restructuring.

Yet, “only S$110 million of cash and shares were left behind to fund the loss-making media business”, Mr Leong said.

“Since the property assets were accumulated over the years with media profits, it is reasonable to expect that more than S$110 million should have been left behind,” he noted, adding that it “makes no business sense” for the Government to have agreed to the restructuring proposal.

Turning to the termination of the public-private partnership for the Sports Hub, the NCMP said while he supports the takeover decision, he noted that the Government has been “overly generous” in estimating the Sports Hub’s fair market value and remaining financial liabilities.

Arguing why he thinks the authorities should not have to compensate the sports facility’s market value, he said: “If this market value is based on the Sports Hubs’ name value, the name value has primarily come from the Sports Hub being a national icon carrying the branding of the National Stadium and occupy the site of many of our national memories, like the Kallang Roar.”

But SHPL did not pay the Government for the value of this branding when it constructed the Sports Hub, Mr Leong added.

“Therefore, there’s no need for the Government to compensate SHPL for this name value now, as SHPL has failed to transform the Sports Hub into a leading venue for local and international events. It is also not justifiable to say SHPL has increased the value of the Sports Hub since its completion.”

Mr Leong also described the S$1.2 billion in outstanding financial liabilities as “too high”.

Noting that S$125 million – about 65 per cent of the Government’s annual fee payments to SHPL – go towards repaying debt each year, he said that would imply a loan interest rate of “more than 8 per cent a year” if one assumes that the billion-dollar bill of building the Sports Hub was fully financed and debt repayment is constant from 2014 to 2035.

This interest rate is “way too high” based on market conditions in 2010 when construction began, Mr Leong argued, adding that an interest rate of 4 per cent would be “more in line” with then-conditions. 

Based on that, he estimated that the annual financing payments should come up to only about S$90 million a year, instead of S$125 million. The outstanding loan principal should have also been reduced to about S$920 million by end-2022 after nine years of repayment, instead of S$1.2 billion.

The NCMP also posited the possibility of SHPL having accumulated surpluses from the Government’s annual fee payments due to lower debt repayments, which he estimated to be S$320 million.

“To sum up, I have estimated an outstanding loan of S$920 million and total accumulated reserves of S$320 million. Hence, the Government should only be paying the difference between the two amounts, which is S$600 million as outstanding financial liabilities to SHPL,” he said.

“I’m worried that the Government's behaviour in commercial deals can potentially lead to a waste of taxpayers’ money,” Mr Leong added.

ASSERTIONS “WITHOUT BASIS”: INDRANEE

Ms Indranee, in her rebuttal, said Mr Leong’s speech include assertions made “without basis” and that the Government has already responded to the two issues “in full many times”, including ministerial statements delivered in Parliament.

On the takeover of Sports Hub, she noted that Minister for Culture, Community and Youth Edwin Tong had laid out reasons for the termination, benefits of the public-private partnership (PPP) approach and the basis behind the termination sum of S$1.5 billion in his ministerial statement on Aug 1.

“The termination sum is derived based on a formula stipulated in the project agreement. Most of it is made up of the capital expenditure, which the Government would have had to bear if we had opted for the traditional procurement model,” said Ms Indranee.

“Minister Edwin had also explained that the full cost of termination is comparable to the financial obligation that we would have had to pay under the PPP, if we had chosen to continue with it.

“In other words, the entire transaction is financially neutral, because we are not paying SHPL more than what we would otherwise have committed to under the PPP model,” she added.

“Unfortunately, Mr Leong has chosen to ignore these detailed explanations, and instead makes a completely baseless and false claim that the termination sum can be lower.”

Likewise, questions raised by Mr Leong regarding SPH Media Trust have also been addressed by two Ministers for Communications and Information – Minister S Iswaran in a ministerial statement last May, followed by Minister Josephine Teo during the ministry’s Committee of Supply debate earlier this year.

The Government has said that its support will allow SPH Media Trust to “make long-term investments in capability development” such as in the areas of technology and talent.

“This is needed to sustain and develop our local news media and ensure that we have a trusted, credible source of news and information for Singaporeans,” said Ms Indranee, adding that support is also necessary for vernacular print media which play a crucial role in preserving the country’s mother tongues and cultural inheritance.

At the same time, the media industry, not just Singapore, faces the challenge of falling revenues amid the rise of digital content platforms and new avenues for free content.

On the NCMP’s claim that SPH’s shareholders could have paid more, Ms Indranee pointed to Mrs Teo’s earlier response that if the restructuring involved a contribution higher than S$110 million, “the shareholders could have walked away”.

“Mr Leong fails to recognise the realities facing the media industry in the real world and that if we were to do as he suggests, it will leave SPH Media on a trajectory of decline and eventually result in a Singapore without a viable English-language domestic media and without our Chinese, Malay and Tamil media, which is not in our national interests,” she added.

Reiterating that the NCMP’s allegations are “completely without basis”, Ms Indranee said: “I ask Members of this House and Singaporeans not to be taken in, but to reject these bogus allegations and to support the Government.

“Then we can continue to sustain good governance and sound policies for the benefit of all Singaporeans, especially to take care of our elderly and to support the disadvantaged and vulnerable members of our society.”