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The Budget Arithmetic Puzzle

NCMP Leong Mun Wai

Every year, the Budget is an arithmetic puzzle. Even financial professionals like me have problems piecing everything together because you have to go beyond the smoke screen and look for the detailed data, which are often incomplete.

However, I do get a sense of the overall picture and I am going to share my understanding here.

1. The ST’s headline of $107B plan refers to the total expenditure, which comprises a $82B of operating expenditure to run the government, $20B of development expenditure and $5B of financial transfers to help Singaporeans.

2. As the total operating revenue is estimated to be $76B ($2B higher than pre-Covid level in 2019), the basic budget deficit is the difference between $76B (Revenue) and $107B (Expenditure) which is $31B.

3. It is the Government’s policy to use only half of the investment returns for spending every year so that the other half is retained in the reserves. The half-used in the budget is called the Net Investment Return Contribution (NIRC).

4. Including the NIRC from our $1.35T in financial assets which is $19.6B (meaning our Net Investment Return for 2021 is estimated to be $39.2B), the overall budget deficit becomes smaller by reducing the shortfall of $31B (Deficit) by $19.6B (NIRC) which gives a final deficit of about $11B.

4. If 100% of the Net Investment Return (NIR) of $39.2B is used, there will actually be no deficit in 2021. So the NIR provides a very strong financial base for us. Even the $52B drawdown to fight the Covid-19 only equals to about one and a half years of our investment returns. There is little damage done to our overall financial reserves and position even when we are fighting the worst crisis of a lifetime to date.

5. Needless to say, we are not encouraging reckless spending but are raising awareness that we do have the resources to help our Singaporeans do better. So let’s see how much of the 2021 Budget is additional help for Singaporeans. The direct benefits to qualifying Singaporeans are as follows:

6. Overall, Budget 2021 has touched on the right pressure points especially in the continuing effort to help Singaporeans upgrade to participate in our economic transformation through research, innovation and enterprise (RIE), tide over Covid-19 via the additional household support, and the enhanced focus on sustainability.

7. However, many of the key budget measures are short term, ad-hoc payouts which do not tackle the root cause of the problem. Middle-class Singaporeans continue to feel stressed because the rising housing, healthcare, education costs are still there.

8. Further, the measures for economic transformation are from the old mold which had proven to be not successful despite having spent about $80B on economic transformation mainly through A*Star and Enterprise Singapore in the past two decades, a sum that is far greater than the Covid-19’s drawdown. More of the same may still not work.

9. I will comment further on these points in my speech during the Budget Debate from 24-26 Feb 2021.

 

*Facebook post by NCMP Leong Mun Wai.

 

 

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17 Responses to “The Budget Arithmetic Puzzle”

  • Ah… so the gongs and bangs of $107B wayang kulit only about $6b are going directly to help “qualifying” Sinkies while most are going to be spent on the gahment?

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  • Not very precise:

    Mr Leong MW’s analysis is not very precise. Here are some points.

    1. “The direct benefits to qualifying Singaporeans are as follows:”

    Please, don’t follow PAP in using “Singaporeans” to mean any two-legged in Singapore. Use “Singaporeans” to mean only citizens. Job Support Scheme pays for citizens and PRs.

    Furthermore, the link from JSS to workers is very weak. The money from JSS can simply be pocketed by the bosses. In which case, it is more of a Boss Enrichment Scheme.

    Please don’t anyhow propagate the nonsensical PAP wayang.

    2. “It is the Government’s policy to use only half of the investment returns for spending every year so that the other half is retained in the reserves. The half-used in the budget is called the Net Investment Return Contribution (NIRC).”

    NIRC is “UP TO HALF” of the investment returns. Not half. The difference is a lot. The NIRC could be just 10% instead of half.

    3. “Including the NIRC from our $1.35T in financial assets.”

    NIRC is NOT from the disclosed $1.35T financial assets. See what MOF says:

    “Net Investment Returns Contribution (NIRC) comprises:

    Up to 50% of the Net Investment Returns (NIR) on the net assets invested by GIC, MAS and Temasek; and,

    Up to 50% of the Net Investment Income (NII) derived from past reserves from the remaining assets.”

    The source of the NII is not clearly stated. Why not just “remaining assets”. What is the meaning of “past reserves from the remaining assets”?

    4. Disclosed financial assets is not the Singapore reserve. The financial assets have been published for many years, and yet nobody except the aristocrats know the real Singapore reserve. Remember it took 56 man years just to list the assets in the Singapore reserve.

    5. “Overall, Budget 2021 has touched on the right pressure points especially in the continuing effort to help Singaporeans.”

    Mr Leong sounds like a PAP MP. What a waste of votes.

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  • Harder Truths:

    Any numbers by the regime are fake and have no bearing on reality.

    All we need to know is this:
    They are spending on the ‘economy’ – which is FT and businesses mostly, we are paying for it.
    They are screwing up TH and GIC, we are paying.
    They take their huge salaries and not ONE has offered to take less – we are paying.
    Citizens get some tiny payouts – we still pay.

    Exactly what is the upside? I am not looking for it.

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  • Great summary:

    Your summary is very good.

    Why 61% cannot understand?
    My guess:
    5% are cronies.
    30% are new citizens yet to understand their long term fate in this place.
    25% are happy with $2 vouchers.

    Harder Truths:
    Any numbers by the regime are fake and have no bearing on reality.

    All we need to know is this:
    They are spending on the ‘economy’ – which is FT and businesses mostly, we are paying for it.
    They are screwing up TH and GIC, we are paying.
    They take their huge salaries and not ONE has offered to take less – we are paying.
    Citizens get some tiny payouts – we still pay.

    Exactly what is the upside? I am not looking for it.

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  • Eddie:

    Ordinary citizens would have known that raising taxes (GST especially) are not the only way to resolve the fiscal issues. There is a way to cut costs and unnecessary expenditures say reduce or cut the obscenely high millionaires salaries of the minority superrich elites who “lead”(sic!!) the majority poor!
    This is simple accounting: cut costs instead of raise taxes!

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  • TEMUSIK PATRIOT:

    My Name is CON and the Name of the Game is CONNING, not Connan The Warrior but CON The Cowered

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  • Please go consult KJ:

    Outside the Cabinet, the politician who best understands Singapore gov finance is KJ.

    Any non-PAP MP who wants to talk about Singapore budget and finance should go consult KJ. Otherwise, they risk talking rubbish and helping PAP to confuse the people.

    If you cannot consult him, for whatever reasons, then you should go read his writings about sg gov finance.

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  • Cheesepie MIW:

    Give out money also need to look at property value? As if those staying in private property are at less risk of Covid and have guaranteed jobs. In Singapore, if you are a compulsive gambler who neglects your family, you get more assistance than if you saved up and managed to buy private property.

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  • xoxo:

    WHERE IS THE INTEGRITY IN THIS BUDGET AS WELL AS THOSE BEFORE?

    IS THIS A GOVT OF THE PEOPLE(CITIZENS) OF SG OR THIS A GOVT FOR OUTSIDERS.

    H$K IS SHOWING HIS TRUE SELF,UNCARING PAPist elite.

    I say this is another LAN CHEOW BUDGET.
    STOP F..KING AROUND.

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  • NotMyProblem:

    Maybe MP Tin Kate Spade can help.

    Ask her if this budget is better than the $23,225 each citizen is getting.

    BTW, I still waiting for the $23K. I got $600 already, thank you. When should I check my account again?

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  • xoxo:

    I humbly opine that Asia ,on aggregate, will experience quicker economic recovery than the West if Covid can be put under control.
    I see slower US recovery despite the USD 1.9 TRILLION stimulus.
    So far,too much of the govt stimulus are not going to REAL DEMAND(the end-consumers).
    The exuberance of US STOCK INDICES during the Covid,with stock indices shooting higher than Pre-Covid levels is simply showing govt money has beem landing on the wrong people.

    USA NEEDS REFORM generally.

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  • Temasek goes for monopoly....:

    “In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more advantageous so.”

    Adam Smith, “The Wealth Of Nations, Book II”

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  • left behind:

    The news not in many languages only in four official language. The older generation especially those Hokkien, Cantonese, teochew speakers cannot understand the Chinese news. The working class is too busy working to watch the news. Lastly the news to me is pro PAP. So many people lack the information about PAP wrong doings.

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  • nihon:

    how effective is the budget in addressing the problems of unemployment and low wages caused by the cco virus and social and income inequality?

    how many poor and low income are left out?

    the cost of living has shot up but the pay is stagnant due to the mad influx caused by the papigs liberal immigration policies. what steps are taken to increase the low pay?

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  • nihon:

    what is the breakdown of the $1.35 t financial assets?

    why is the returns so low?

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  • Harder Truths:

    Great summary: Why 61% cannot understand?

    The majority of $G-born are greedy and think only of themselves. The 61% consist of government workers, government contractor employees, citizens who live off FT like parasites from rent and other services, citizens who are in the industries that support tourism and free trade – the kind that destroys local jobs.

    They will never change, they are what they are. Indeed, I think of the 39% only about 20% are really against communism. The remainder may just flip over if things get better.

    However, let us be realistic. The US has entered a Great Depression, which will take decades to get out of. This will affect everyone else. Regime leeders who think the economy will get back next year are idiots – this Depression is worse than the 1929 – 1941 Great Depression and will see the whole world change drastically,

    The pain is just beginning. It is too late to get off the sinking ship now. The regime have no idea how to recover from this crisis. Prepare for the worst.

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  • Apamacham21:

    How will gahmen enforce vaccination ?

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