Massive Reserves: Does It Benefit, Or Shortchange Singaporeans?

Arguably, we have benefitted from the Solidarity, Unity and Resillience Budgets, because they made use of the reserves to ease the financial pain of COVID 19.There has been much debate over the government’s far sighted move to accumulate excessive amount of reserves, especially to safeguard ourselves against crises like COVID 19. The PAP and its supporters said” I told you so, without reserves, we would be feeling the pain of COVID 19 far worse” to justify their argument of accumulating such excessive reserves. However, they do not see the other side of the coin. They do not see the flip side of accumulating reserves. Here’s my take on the issue.

A dollar added to the reserves is one dollar less in the economy. The economy would have been far larger had the government not collected so much reserves. The reserves are made of two components. One, the accumulated surplus of the previous terms. Two, the land sales of the government. The average government surplus for the past term was $19 billion. Thats about 1% of GDP. The revenue from sales of land has averaged S$17b per annum between 2013 to 2019. Thats about 5% of GDP. In total,accumulating reserves has cost our economy 6% of growth these past few years.

Our economy would have grown by 6% more the past five years had the government not put this sum in the reserves. The GDP grew by 15% over the last five years. It would have grown by 33% had the government not put the surpluses into the reserves. Each of you would have been 18% richer. The average household would be earning $1700 more a month!

And that is not all, if you compare, the government is actually losing money on the reserves.

Throughout the last 20 years, the return on investment on the reserves by Temasek and GIC has been less than the corresponding GDP growth of Singapore. Temasek’s return since 20 years ago was about 7% p.a. GIC’s was 5%. Singapore’s economy (GDP) grew from $96 billion in 2000 to $362 billion in 2019. That represents an average growth of 7.2% p.a (even after the reserves has been subtracted). The money taken out of the economy could potentially have grown at more than 7.2% p.a as well. Therefore, by taking money out of the economy and investing it using GIC/Temasek, the government is actually losing Singaporean’s money.

And despite the pain of COVID19 the government is only taking $52 billion from the reserves. That represents only 5% of the estimated $1.1 trillion worth of the reserves. Thats a very paltry sum, around the same as investment gains of GIC in one year.

Let me use this analogy to explain how having such massive reserves has misled and shortchanged Singaporeans.

Think of the PAP as your PAPA. Your PAPA has two sons, you and your brother. Both of you are stock traders. You earn money by investing in shares. However,every year, PAPA confisicates 6% of your dividends, but leaves your brother’s untouched.

As a result, over a long period, you have become far poorer than your brother. Your brother lives in a condominium and drive a mercedes. You live in a 4 room flat and drive a Honda.

Then the economic crisis comes. Both of you lost half of your income. Your brother has to sell his condominium and his mercedes, and downgrade to a 4 room flat and a honda. But then PAPA gives you allowance, so you don’t have to sell your flat and your car for money.

Your brother feels the pain of losing his house and his car, but you don’t feel any pain coz you don’t lose anything. At first, you are grateful that PAPA is around. But after you look back, you should feel very angry. Why?

In the end, your brother and you both arrive back in the same SES. 4 room flat and Honda. However,Your brother had the privilege of enjoying a rich life, whereas you have been poor all the while. You have been spared the pain of recession, at the expense of enjoying the good life when times are good. Overall, you are still worse off!

The PAP has blinded us to be grateful to them just so because they put back $60 billion of the reserves, our own money to begin with, so that we don’t feel the economic pain of COVID19. However, what we don’t realise is that we have been suffering with economic pain all the while, becoming a lot poorer than what we could have been, had the government not accumulated so much reserves!

Think about what I said and vote wisely!

 

Abel Tan

 

 

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15 Responses to “Massive Reserves: Does It Benefit, Or Shortchange Singaporeans?”

  • Do more:

    Do more for the common man..
    They would have a better life if the policy was more pro people.
    The common man has a tough life coping with the high cost of living here.
    Many do not have much cash especially our elders…
    The high costs of HDB and CPF Policy has left many of our elders with little cash for a decent retirements.
    Need to do more for the people!!!

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  • PAP not PAPA:

    Hopefully, writers don’t try to equate PAP to papa. Just call PAP a greedy servant.

    Modified:

    Think of the PAP as your greedy servant. Your greedy servant serves two men, you and your brother. Both of you are stock traders. You earn money by investing in shares. However, every year, greedy servant confisicates 6% of your dividends, but leaves your brother’s untouched.

    As a result, over a long period, you have become far poorer than your brother. Your brother lives in a condominium and drive a mercedes. You live in a 4 room flat and drive a Honda.

    Then the economic crisis comes. Both of you lost half of your income. Your brother has to sell his condominium and his mercedes, and downgrade to a 4 room flat and a honda. But then greedy servant gives you allowance, so you don’t have to sell your flat and your car for money.

    Your brother feels the pain of losing his house and his car, but you don’t feel any pain coz you don’t lose anything. At first, you are grateful that greedy servant is around. But after you look back, you should feel very angry. Why?

    In the end, your brother and you both arrive back in the same SES. 4 room flat and Honda. However,Your brother had the privilege of enjoying a rich life, whereas you have been poor all the while. You have been spared the pain of recession, at the expense of enjoying the good life when times are good. Overall, you are still worse off!

    (There, your story without the papa nonsense. Don’t elevate the greedy servant to a papa status.)

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  • That's it!:

    Yes. That’s it! Straight to the point.

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  • Vote buying:

    Tin Bei Ling said each is given budgetary support $23,000.

    So far, only received $600 and further $600.

    What happens to the remaining money we are promised?

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  • Billyma:

    All along the message from PAP, current & past, is that we must not touch the reserve except on really really bad & heavy raining days.

    Maybe PAP a should add one more good reason to draw on the reserve, to win elections.

    This is the case in the past 2 or 3 GE.
    And is even more so in GE2020.

    So PAP can stop barking about how to protect our reserve, in reality it’s about how to use it for PAP not just to continue to stay in absolute power but also how to enrich themselves.

    Citing state secrets in every turn, there is no accountability nor transparency.
    Everything PAP does to make themselves well off are done behind closed doors & dark rooms.

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  • patriot of TUMASIK:

    “THINK”…the Key to better Life and “Happiness” and PROSPERITY eventually

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  • trublu:

    Ma$$ive Re$erve$ after GREAT EFFORT$ TO COLLECT MORE $$$ FROM peasants.

    Then,MA$$IVELY USED IT TO GIVE TO SOME RICH sgs and ALIENS/PRs?

    It is all very Me$$y indeed!
    Poor-rich divide gets wider.

    MrHeng,i can return the BIGLY $600 so as NOT TO BURDEN OUR YOUNG sgs with heavier future tax burden but also that you would not COLLECT MORE G$T from old uncles like me after GE as we are ageing n have to pay for big medical bills,worse with GST???

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  • Realistically:

    @ Abel Tan

    >>However, they do not see the other side of the coin. They do not see the flip side of accumulating reserves.<>Hopefully, writers don’t try to equate PAP to papa. Just call PAP a greedy servant.<<

    In my view, it is more like Pillage And Plunder.

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  • limpei:

    Cannot withdraw cpf at 55 after working so hard.

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  • Secrecy national security hehe:

    So a Singkie entrepreneur in Sengkang (who was a reincarnated Egyptian) was approached by a Pappy solicitor asking for funding for the king’s tomb. But the man with a lockdown & battered CPF protested: “It’s another pyramid plan right!”

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  • Do more for the PG and MG:

    Need to do more for PG and the MG..
    Singapore would have suffer much more if we do not the reserve build by the PG and the MG…
    Better take care of them..only right.

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  • Realistically:

    In saying: “In my view, it is more like Pillage And Plunder.”, I was referring to:

    @ PAP not PAPA:
    July 7, 2020 at 6:06 am (Quote)

    Hopefully, writers don’t try to equate PAP to papa. Just call PAP a greedy servant.
    —-

    To me it is obvious that I am being censored.

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  • Realistically:

    @ Abel Tan

    >>The economy would have been far larger had the government not collected so much reserves.<<

    Really? How much was added to our economy when a former Permanent Secretary to the Environment & Water Resources spent $45K in France to learn French cooking?

    The reality of the economy and the market place seems to have eluded you.

    I've more to add, but then what I want to post might not see the light of the day TRE………..due to censorship.

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  • Trust only myself:

    Vote buying:
    Tin Bei Ling said each is given budgetary support $23,000.

    So far, only received $600 and further $600.

    What happens to the remaining money we are promised?

    Still thinking about her lie….?

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  • Better Life:

    The Government should make effort to change the Policy and make the life of the Ordinary Citizen better..
    Now many are Cash poor to cope with the cost of Living…with little Savings,especially our Seniors.

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