Monday, March 7, 2011

Budget goodies could lead to an unhealthy 'culture of demand': MP

Mar 02, 2011

by Leong Wee Keat

SINGAPORE - As Members of Parliament voiced support yesterday for the heftiest Government Budget to date, one lawmaker cautioned against an unhealthy "national culture" of expecting goodies and bonuses every year.

Taking part in the Budget debate, Marine Parade GRC MP Ong Seh Hong noted that Singapore was able to have a generous Budget this year due to the changes in the computation of Net Investment Returns (NIR) contributions in 2008. However, he wondered if such a culture of expecting annual Budget goodies signalled "the beginning of the long slide down to a culture of demand".

And while some MPs have called for the Government to do more in the fight against inflation, Tampines GRC MP Ong Kian Min took another tack: He suggested more could be done to help Singaporeans understand that the Government "cannot shield residents completely from the impact of rising costs".

He also warned of another change that may "shake" Singapore's economy: When the low interest rates rise eventually. "Businesses and the man-on-the-street should be prepared for it in their financial planning to avoid rude shocks," he said.

The uncertainty in the global economy also led Holland-Bukit Timah GRC MP Liang Eng Hwa to ask for information on the Government of Singapore Investment Corporation and Temasek Holdings.

"Has the market volatility in the last three years affected the level of the expected long-term real rates of return, which in turn could also affect NIR in future Budgets?" he wondered.

Dr Ong, who also wanted to know if the Republic's reserves have continued to grow in real terms, urged the Government "to be even more prudent and cautious" while preparing for "more uncertainties and future crises", given current world economic and political situations.

Opposition parties have criticised the Budget as "an election Budget", although the Government will put S$4 billion - drawn at the height of the downturn to fund various recovery programmes - back into the reserves.

Meanwhile, some Singaporeans have expressed worries in numerous forums that the cash payouts will not cover all rising costs.

But several ruling party MPs defended the Budget yesterday.

Citing various Budgets announced over the last 40 years, Mrs Josephine Teo (Bishan-Toa Payoh GRC) said they had "very consistent themes", such as not over-taxing, using resources wisely, saving for a rainy day and investing in training, while sharing gains with Singaporeans.

"It feels almost uncanny - you can change the Finance Minister ... and their Budget speeches still sound quite alike," she said.


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