Ministry of Finance Committee of Supply 2017 – Cuts by WP MPs and NCMPs

(Delivered In Parliament On 7 March 2017)


Office of Budget Responsibility – Low Thia Khiang

Madam, I would like to call for the government to consider setting up an independent office for budgetary responsibility that provides expert, non-partisan, open-source analysis of the government’s budgetary plans, and is accountable to Parliament.

I believe an independent fiscal watchdog is necessary since the government has been concerned about the rising expenditure in recent years, and the Minister for Finance has also raised the prospect of an increase in taxes.

The public will be interested to know the effect of public expenditure and its actual impact on fiscal position by an organization independent of the government by providing expert analysis.

I believe that no individual outside the government has the expertise to analyse each year’s budget in much depth, and I believe that Parliament and Singaporeans would benefit from the in-depth analysis provided by an independent fiscal watchdog. Such an office also helps to improve fiscal governance by holding the government more accountable through better transparency.

There are countries that have an independent budgetary office. The UK Office for Budgetary Responsibility was established in 2010, and its missions are:

  1. To produce detailed five-year forecasts for the economy and public finances;
  2. Judge the Government’s performance against its fiscal targets;
  3. Assess long-term fiscal sustainability;
  4. Evaluate fiscal risks; and
  5. Scrutinise the government’s costing measures.

The independent analysis of such an office can also provide input to the Elected President on whether or not to veto supply bills, should the government wishes to draw on reserves not accumulated by the current government. Given that this is one of most important decisions the President might have to make, there should be a nonpartisan, professional and specialised outfit putting out independent assessments to assist the Elected President.


Taxes – Low Thia Khiang

Madam, the Minister for Finance appears to be laying the ground to prepare Singaporeans for a rise in taxes. He said that “we will have to raise revenues through new taxes or raise tax rates” to keep our finances sustainable.

I would therefore like to ask the minister, what are the new forms of taxes that he is considering? What are the ministry’s considerations in introducing new taxes, and what are the principles guiding these considerations?

There has been widespread speculation that the government is looking to raise GST, with experts and journalists suggesting that it is no longer a matter of whether the government will do it – it is simply a matter of when.

I would like to ask the minister is he planning a GST increase as a revenue measure before the end of the decade? If so, when is he looking to implement this increase in GST, and by how much?

It is widely recognised that GST is a regressive tax that hurts the poor much more than it hurts the rich, which is why the government has been providing GST vouchers in an effort to correct the impact on lower-income households. However, GST vouchers do not fully offset the amount of GST paid by lower-income households. I would like to know whether the government has exhausted all other cost cutting and revenue measures hence have to raise tax.

If the minister is indeed considering an increase in GST before the end of the decade, I hope he can be upfront with Singaporeans now so they are not blindsided by the government as they were with the sudden 30% increase in water prices.


Retrenchment Tax Deferment – Daniel Goh

Madam, I would like to ask the minister to consider temporarily deferring the collection of personal income tax from workers who have been retrenched or made redundant.

Typically, more workers are retrenched in the first and fourth quarters of each year than in the second and third quarters. This means that these workers would have earned enough income to be taxed, and their tax liability becomes an additional drain on savings that they have to factor in. Workers who have signed on to GIRO payments will experience ongoing tax deductions even during the period of unemployment – either monthly, or in a lump sum – and if they are unable to pay up, they are slapped with a late payment penalty.

I would like to propose that workers who have been retrenched or made redundant be allowed to defer payment of all personal income tax for a period of six months, or until the worker receives fresh CPF contribution for the new job, whichever is sooner. The six-month deferment would be in line with the duration used in labour policy for retrenchment.

Giving laid off workers the option of deferring payment of their personal income tax would help to alleviate some financial stress, especially for middle-class workers. It will give them room to plan their finances so their families can be better prepared to tide over the period of unemployment. It will also give them some psychological security during the transitional period to focus their energies on training and seeking re-employment.


Leadership in Government-linked Firms – Leon Perera

Madam, there are many prominent examples of former senior civil servants and military officers who have taken up senior appointments in GLCs. Often, such transitions happen when the individual is in his 40s.

There are many examples of such appointments in the past and some are also still currently serving.

Madam I have no doubt that the possibility of senior civil servants and military officers moving to GLCs when they reach a certain age helps us attract good talent to the civil service and armed forces and that is not a negligible benefit. Young people contemplating a career in the civil service and armed forces would know that there is a pathway to enable them to move into the private sector should they chose to do so.

However, has MOF considered if this benefit outweighs the potential downside, which is that our GLC senior posts may be filled by individuals who lack experience in their respective industries?

Has the MOF analysed the performance of GLCs during periods when they are headed by a former civil servant or Army officer versus periods when they are headed by an industry veteran or a private sector veteran to see if there are any differences in business performance and organizational effectiveness? If so, what have been the findings? If not, would the Ministry consider such an analysis?


Local Firms in Government Procurement – Chen Show Mao

The importance of government-led demand to our small and medium enterprises (SMEs) has been much rehearsed in these Committee of Supply proceedings for other ministries. Through their government procurement experience, SMEs get to build not only the track record but also the capabilities they need to be competitive both at home and outside Singapore in their internationalisation drive.

Could we complement these efforts and facilitate these outcomes by refinements or enhancements to our government procurement practice? Subject of course to alignment with international standards and obligations and the underlying principles of fairness, transparency and value-for-money.

Could the scope of work be more finely delineated by specific types of requirements so that different SMEs may take on different parts of the work? This could help them enter into collaborations and form consortiums to bid for higher value contracts in the future. Could SMEs with niche technologies relevant to the work be engaged through research partnerships with GovTech or other agencies?

Madam, our SMEs contribute half of our GDP and employ 70% of our workforce. They have won the substantial majority of government tenders under our open procurement system in recent years, both by number and value of contracts. Due however to their large numbers and variety, it is estimated that less than 5% of our SMEs secure government projects. Last year, the first Government Procurement Fair was held, in part to encourage SMEs to participate in the government procurement process. Could we look into possible enhancements and refinements to the process that would help even more of them to do so?