Hazel Poa on reviewing public finances to help Singaporeans

The Progress Singapore Party (PSP) agrees that there are benefits in having national reserves to cope with unforeseen circumstances, but is of the view that there comes a point beyond which continued accumulation of reserves hurts the welfare of present-day Singaporeans, NCMP Hazel Poa said in Parliament on Wednesday (Feb 7). She explained how PSP arrived at its estimate of S$1.2 trillion for Singapore’s financial reserves. She asked if the Government would disclose the average difference between the rate of return it earned from investing CPF savings and the interest rate paid to CPF members over the past 20 years. She also spoke about the cost of “excessive reserves accumulation”. Ms Poa said if excess returns from CPF savings were not put into the reserves, it could be paid to CPF members to improve their retirement adequacy. Reserve accumulation also comes from charging land cost for public housing, she said. If this were not an expenditure item for HDB, the need for the Government to raise revenue by raising taxes like GST would be reduced. As the population ages and the generations who built up the reserves reach an age where higher healthcare expenditures are incurred, it is timely to review Singapore’s reserve accumulation policies, said Ms Poa. Should the country fund these higher healthcare expenditures by raising taxes, or choose to slow the building up of reserves and use land sales proceeds instead? She also questioned who Singaporeans are leaving their reserves to - given that the total fertility rate has fallen to half the replacement rate. She urged the Government to review its approach to the reserves and seek a better balance between the needs of present and future generations.