COMMITTEE OF SUPPLY DEBATE 2021:
SPEECH BY SECOND MINISTER FOR FINANCE INDRANEE RAJAH
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 Jamus Lim 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 Singapore 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 Liang Eng Hwa, Ms Foo Mee Har and Mr Saktiandi Supaat 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 Edward Chia and Ms Jessica Tan 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 Vivian Balakrishnan 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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