COMMITTEE OF SUPPLY DEBATE 2021:

SPEECH BY SECOND MINISTER FOR FINANCE

A. INTRODUCTION

A1. Thank you Mr Deputy Chairman. Let me just address the

independent fiscal council. Also earlier on, during the debate on the

Budget Statement, there were a few confused looks around the

chamber, so I thought it would be helpful if I just explained what that

was about. Mr Pritam Singh had suggested a parliamentary budget

council. In his response, the Deputy Prime Minister had referred to

that as having a $20 million budget being requested for it.

A2. The reason why that was referred to was because when MPs file

cuts, they have to give an indication of what the cut is about so that

the Ministry can prepare.

A3. And in this case, Associate Professor had filed the gist

that he proposed that MOF consider the formation of an

independent fiscal council, the parliamentary budget council of

Singapore seeded with an initial $20 million. And hence I sought

clarification from the Leader of the Opposition, whether his

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parliamentary budget office was the same as the independent fiscal

council and the Leader kindly confirmed that they were actually the

same. He said, there's only one council that he's talking about. And

we heard Associate Professor Jamus Lim just now, who has

confirmed that what he’s asking is for a council, that is set up at a

proposed cost of $20million. This is just so that everybody knows

what everyone is speaking about.

B. INDEPENDENT FISCAL COUNCIL

B1. So let me address Associate Professor Jamus Lim’s cut. In

assessing the value of such a proposal, the fundamental starting

point must always be: why? What is the need to be addressed?

a. The Associate Professor ran us through various independent

fiscal entities around the world. I will refer to them as

Independent Fiscal Institutions (IFIs).

B2. It is important to first understand the context in which such

institutions are established.

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a. The setting up of IFIs around the world took place mainly in

the aftermath of the Global Financial Crisis in 2008 and 2009,

when government deficits and debts were high. There were

some which were established beforehand. For example, in the

US and the Netherlands. But primarily the largest bulk of them

were established after the Global Financial Crisis. So more

than half of the IFIs in the OECD today were established after

the Global Financial Crisis and the main intent was to prevent

future fiscal crises.

b. In those cases, fiscal rules had proved insufficient to ensure

prudent management of the public finances before the crisis.

IFIs were set up to safeguard fiscal discipline, eradicate

unreliable budgeting, and rebuild public trust in policymakers’

capacity to manage public budgets prudently and

transparently.

B3. However, the context in is very different. The ills which

led to the need for IFIs in other systems are not present in our

system and we continue to keep a very strict eye on our fiscal

prudence.

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a. Markets have confidence in our system. We are among the

small number of countries today that continue to enjoy a AAA

credit rating.

b. The Government has been disciplined in keeping to our fiscal

rules and safeguards. We have run balanced budgets in each

term of Government barring major crises. The draw on Past

Reserves for COVID-19 relief, which was a crisis situation,

was done in accordance with our Reserves Protection

Framework.

B4. We have put in place a strong system to scrutinise spending and

debate budgetary matters, without incurring the costs of setting up

additional fiscal monitoring institutions.

a. The Constitution requires us to run a balanced budget over

each term of government, and any departure would require

the approval of the President.

b. The Government is required under the Constitution to seek

Parliament's approval for its expenditure and revenue during

each year's Budget.

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c. The annual Budget debate and Committee of Supply (COS)

provide the opportunity for Members of Parliament to debate

on and scrutinise Government policies and programmes.

d. Under the Constitution, the Government cannot draw on the

reserves accumulated by past terms of Government without

the approval of the Elected President.

e. There is a standing Parliamentary Select Committee, the

Estimates Committee, which examines the Government's

budget.

f. The Government's accounts are audited by the Auditor-

General's Office. The AGO's findings are reported to the

Public Accounts Committee (PAC), also another

parliamentary committee, which can call on the relevant

agencies to explain lapses or take corrective actions.

B5. More importantly, the Government has been upfront about the hard

choices that we have to make on budgetary matters. For example,

we have not shied away from highlighting the need to raise taxes to

meet longer-term increase in healthcare and social spending needs.

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B6. Robust, intellectually honest analysis is important, to foster more

informed parliamentary debate. But ultimately, there is no substitute

for having the political courage to make difficult budgetary choices.

a. Members of an independent fiscal council are not elected

representatives in Parliament. Their role is to advise, but the

responsibility of making difficult decisions ultimately lies with

the elected Government. Alice Rivlin, the founding chair of the

US Congressional Budget Office, said this very well. She said

that IFIs “can play an important role in ensuring realistic and

well-informed debate based on honest numbers, focusing

attention on the consequences of action (or inaction), and

identifying more or less sustainable solutions to budget

dilemmas. They cannot instil political courage to make

unpopular decisions. Political leaders have to do that for

themselves.”

b. Setting up an independent fiscal council will not substitute for

such courage. It will also not miraculously remove the

structural drivers for higher healthcare and social expenditure,

nor will it delay any painful changes.

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c. Based on the experiences of other countries, did the setting

up of IFIs solve their fiscal management issues? No, because

ultimately, we cannot “outsource’ honest and upfront debate.

d. We should focus our time and energy on having robust,

honest and constructive debates, deciding on the trade-offs

and not delegate the responsibility to a third party.

B7. Forecasting is an inherently uncertain exercise, and independent

institutions are not exempt from this uncertainty. So the OBR, or the

Office of Budget Responsibility, in the UK has actually been

criticised for overly optimistic forecasts and has had to downgrade

its forecasts several times since it was set up.

B8. So we recognise that there will always be uncertainty in forecasting

and fiscal planning, but we cannot wish away more fundamental

drivers of expenditure, particularly the increase in public health

expenditure, as our population ages.

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C. SUPPORTING SOCIAL AND ENVIRONMENTAL OUTCOMES

C1. On supporting social and environmental outcomes, Mr Desmond

Choo asked how we can drive environmental and social outcomes

through our funding and corporate regulatory levers.

C2. MOF allocates public resources, and uses tax, charges and

corporate regulatory levers, in order to achieve broader societal

objectives, including social and environmental outcomes. These

measures work alongside public education efforts.

C3. We have more than doubled our spending in the social and

environmental sectors over the last decade we have achieved good

social outcomes.

a. In the area of gender equality, Singapore reports our progress

regularly to the United Nation Convention on the Elimination

of All Forms of Discrimination against Women. We have done

relatively well in areas such as higher education attainment,

and are closing the gender gap in labour force participation

rates and wages

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b. However, more can be done. In some metrics, such as women

in corporate leadership, we still lag behind the most

progressive countries. Women still shoulder most of the

caregiving burden.

C4. For environmental outcomes, we have one of the lowest carbon

emissions per dollar of GDP in the world. Building on this, we are

working towards peaking our emissions around 2030, and achieving

our long-term net-zero aspirations as soon as viable. To do so, we

are supporting businesses and households to become more energy-

efficient, among other initiatives. Businesses can tap on EDB’s

Resource Efficiency Grant for Energy or NEA’s Energy Efficiency

Fund for funding support to adopt energy efficient technologies.

However, there remain areas of improvement, such as our domestic

recycling rate, which we hope to increase to 30% by 2030.

C5. On procurement, environmental sustainability requirements are

already part of the consideration. For instance, agencies are

required to buy energy-efficient appliances, and government

buildings are required to achieve Green Mark standards. We will

continue to enhance these requirements in support of

GreenGov.SG.

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C6. Mr Choo also suggested using the corporate regulatory lever.

C7. There are existing disclosure requirements for listed companies.

For example:

a. The Code of Corporate Governance requires listed companies

to disclose their board diversity policy in the company’s annual

report.

b. The Singapore Exchange Listing Rules require listed

companies to prepare annual sustainability reports.

C8. The Government is mindful that a unified international sustainability

framework has yet to be agreed upon and is monitoring international

developments closely. We will take these into account in studying

when it would be feasible and timely to introduce sustainability

reporting for non-listed companies.

C9. Besides the efforts made by the Government, businesses,

organisations, and individuals must all play their part in changing

their mindsets and accepting new societal norms. I encourage the

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various stakeholders to step up and help us achieve better

environmental and social outcomes together.

D. SUPPORTING BUSINESSES, CITIZENS AND COMMUNITY

D1. Mr , Ms and Mr asked

how MOF exercised agility and flexibility to flow assistance quickly

to businesses and citizens.

D2. In response to COVID-19, our priority was to flow assistance to

those affected as quickly as possible.

a. For example, the CPF Board and Inland Revenue Authority of

Singapore (IRAS) enhanced their processes to speed up

disbursements of the Jobs Support Scheme (JSS). This

enabled the JSS payouts to be brought forward by three

months, from July 2020 to April 2020. The JSS has helped to

keep our unemployment rate in check.

D3. We also facilitated faster payment to government suppliers to ease

their cashflows. During the pandemic, we went the extra mile to pay

businesses as early as possible, rather than when the payment is

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due, which is typically 30 days from invoice date. As of end-Jan

2021, about 90% of invoices less than $5,000 were paid within an

average of 12 days, benefitting about 4,500 businesses, comprising

mostly SMEs.

D4. We exercised flexibility in applying regulations on businesses in

view of the COVID-19 disruptions. The Accounting and Corporate

Regulatory Authority (ACRA) extended the deadline to hold Annual

General Meetings (AGMs) and file annual returns for companies.

ACRA also worked closely with MAS, Singapore Exchange

Regulation and other agencies to facilitate virtual AGMs. An

estimated 120,000 eligible companies can benefit from this.

D5. Mr Saktiandi also asked about how we coped with the increased

workload. The public service mobilised manpower resources within

and across agencies to help our frontline operations. On top of that,

we also hired temporary staff. For example, MSF hired more than

300 temporary staff in 2020, with many redeployed from the aviation

sector, to ensure prompt assessing of the COVID-19 Support Grant.

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D6. I agree with Ms Foo that it is important for the government to step

up our collaborations and increase partnership to co-create

solutions with businesses and community.

D7. Through a mix of traditional and digital media and engagement

platforms, we reached out to 50% more Singaporeans during our

recent budget engagements, as compared to the previous year. We

received suggestions from close to 9,000 Singaporeans. Agencies

considered the suggestions and refined our support scheme

parameters to benefit more citizens and businesses. For example,

we carefully evaluated feedback and included the coverage of

qualifying shareholder-directors’ wages under the JSS since May

2020.

D8. We are stepping up our partnerships with businesses, community

groups and citizens to create policy solutions together.

a. For example, the Technology Hub for Non-Profit

Organisations (NPO) initiative, was an idea that originated

from the NPO leaders to accelerate the digital transformation

of the non-profit sector during COVID-19. Tote Board

partnered MCCY, MSF and NCSS and worked with IT

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companies to put together this ‘one-stop shop’, providing a

variety of shared-service IT manpower, programmes and

digital solutions to NPOs.

E. ENHANCING PUBLIC SERVICE CAPABILITIES

E1. Mr Liang, Mr and Ms asked about MOF’s

efforts in building up public sector capabilities and strengthening

functional leadership.

E2. MOF is leading efforts to raise public sector capabilities in essential

functions such as finance, procurement, grants management,

shared services and internal audit. These functions play vital roles

in ensuring the Government spends prudently, effectively and

accountably. When these functions perform well, agencies can

focus on their core missions of helping businesses, citizens and the

community. MOF has re-organised ourselves and formed dedicated

offices to drive these efforts.

E3. To strengthen grants management, MOF established a new grants

governance framework last year that sets out rules and guidance

that cover all stages of a grant – from grant design, approval and

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disbursement, to monitoring and fraud detection. The Grants

Governance Office was formed to drive its implementation and raise

agencies’ capabilities to ensure proper financial governance.

E4. We are transforming government procurement to buy more smartly

and effectively.

a. MOF set up the Government Procurement Function Office last

year to drive efforts to transform and strengthen the

government’s procurement function.

b. We are taking further steps to consolidate the procurement of

facilities management services of government buildings. A

central team with deeper expertise would manage these

premises, instead of smaller decentralised teams. This

provides the scale for service providers to adopt more

innovative, less manpower intensive solutions to manage the

facilities, and is in line with our industry transformation efforts.

c. As a start, we have consolidated the facilities management of

The Treasury and Revenue House. This has resulted in

estimated annual savings of $1.2 million. It also enabled the

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adoption of innovative technology solutions that facilitate

workflow automation, data analytics, and access to real-time

data, which has improved service delivery at reduced costs.

E5. As Mr Chia pointed out, we need to develop public officers with deep

sector technical knowledge. The Finance and Procurement

Academy set up by MOF is working with agencies such as the

Building and Construction Authority and GovTech to deepen

technical know-how in specialised procurement areas such as

contract management for construction and Infocomm Technology.

We will also be facilitating attachment stints and exchange

programmes with the private sector to enable our officers to stay

abreast of the latest professional and industry developments.

E6. In response to Ms Foo’s and Ms Tan’s questions, as we strengthen

the public sector capabilities and processes, we are also adopting

more pervasive digitalisation in our processes. These efforts also

help spur digital transformation in the private sector.

E7. For instance, MOF and GovTech are partnering businesses to co-

create a solution which facilitates public officers to make smaller

value purchases on commercial digital platforms.

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a. We are currently piloting this with Eezee and Shopee, and will

be onboarding more e-commerce platforms progressively in

the coming months. This solution not only helps us save

processing time, it also incentivises vendors to digitalise and

bring their businesses online.

E8. Ms Foo also asked if local businesses could re-use government

developed capabilities. Minister earlier

mentioned various collaborations between Government and the

private sector, like SGFinDex, to deliver solutions. GovTech has

also launched the Singapore Government Developer Portal in

December 2020. This one-stop resource site enables tech

developers to discover the latest government IT solutions to build

on and integrate into their applications.

F. CONCLUSION

F1. Mr Chairman, the Public Service continues to enhance its

capabilities, and is committed to working with the community and

businesses to position Singapore to grow and thrive for the long

term. Let us work in partnership so that Singapore can emerge

stronger together.

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