Temasek Holdings CEO Ho Ching has drawn criticism for claiming that the Government of Singapore Investment Corporation (GIC), Monetary Authority of Singapore (MAS) and Temasek Holdings contributed the most to Singapore’s Budget.
In a Facebook post on Monday (21 Jan), Ms Ho, the wife of Prime Minister Lee Hsien Loong, said:
“The single largest contributor to SG budget was the returns from investments by GIC, MAS, and Temasek.
This is more than corporate or personal income taxes, and more than GST.
This was since 2016, when Temasek was moved to the NIR framework for Singov budget. This means up to half of Temasek’s projected long term returns net of inflation may be used for Singov spending.
Previously, Temasek’s contributions to the budget spending was up to half its dividend payments to its shareholder, Singov.
But dividends are more volatile and pro-cyclical – the dividends are more in good years and less in recession years, which is the opposite of what govt budgets should be.
Govts should spend more in recession years and save more in good years, as a way to moderate the swings. But this is also practical in a way, bcos it is cheaper to build infrastructure in the recession years rather than during boom years.
Without tapping on the dividends or returns from GIC, MAS, and Temasek, Singov would have had to raise taxes long ago for more social spending.
Without such contributions, programmes like the Pioneer Generation Package could only have come from higher taxes or cuts to other essential programmes.”
Ms Ho shared a link from Channel NewsAsia, titled “Five things you never knew about the Singapore Budget”, which stated that:
“At 17.9 per cent, the investment returns contribution from reserves – also known as Net Investment Returns Contribution (NIRC) – is the largest contributor to the Budget. The NIRC is expected to hit an estimated S$15.8 billion in FY2018.”
The public has expressed skepticism Ms Ho’s claim, and the supporting data.
Questions have been raised over just how much Singapore has in its reserves, and why an abundant amount of reserves would necessitate an increase in GST.