SINGAPORE – After the war between Russia and Ukraine caused a surge in global inflation, the authorities in Singapore dealt with the impact by supporting firms undertaking restructuring efforts, and people in the lower- and middle-income groups, said Transport Minister Chee Hong Tat.
It was important to “do the right thing”, and not pursue populist and short-term measures, said Mr Chee, who is also Second Finance Minister.
Speaking at the Economic Society of Singapore’s annual dinner at Orchard Hotel on Aug 28, he noted that the Government could have taken the easier and more populist approach of fixing prices and giving out broad-based subsidies, instead of understanding the needs and production processes of each sector.
Instead, it worked to ensure that firms were more productive, workers became more skilled and adaptable, and real incomes can continue rising sustainably. This will keep Singapore on track to emerge stronger in the longer term when the shock passes, he added.
“This is also how we steward our resources responsibly, instead of indulging in ‘fiscal fantasies’ - that we can somehow keep spending more and more, and find the taxes or loans to support this increased expenditure down the road, without having to carefully assess the consequences upfront,” he said.
“It is neither politically responsible nor economically sound for some parties to propose spending more on one hand, and then criticise the Government for raising taxes to ensure that the additional expenditure can be sustained over the longer term,” he told an audience of more than 400 people, including policymakers, economists, academics and business leaders.
“We need to be honest with the population that higher sustained spending can only be supported if we are prepared to foot the bill as a society, and not dabble in populist politics or fiscal fantasies by pretending that the additional spending can magically happen.”
Mr Chee said it is also disingenuous to suggest that drawing down from past reserves will not take resources away from future generations, and yet claim such moves are not a raid on past reserves.
“The way I see it - if it walks like a duck, quacks like a duck, looks like a duck, it is a duck. Don’t try to mislead people by saying it is a chicken,” he added.
Aside from supporting Singaporeans in adjusting to shocks caused by global events, Mr Chee sketched out two other key areas in which the Government believes it can play a role.
These are in ensuring that essential services such as public transport are adequate, and in planning and building infrastructure ahead of demand to open the way for further investments.
On the support doled out by the Government to cushion cost-of-living concerns following the Russia-Ukraine war, the minister added that these were done to avoid distorting price signals and preserve the right economic incentives for consumption.
The help offered included extending more support to companies making the effort to restructure and transform, through the Energy Efficiency Grant, which encouraged firms to invest in energy-efficient technology, and the SkillsFuture Enterprise Credit, which offsets course fees for employees.
Rebates that are separate from the pricing of resources were also given, with more channelled to lower and middle-income groups. These included a one-off cost-of-living special payment of between $200 and $400 for eligible adult Singaporeans, U-Save rebates for utility bills, and CDC vouchers that helped households defray their daily expenses.
Noting that it is better to preserve price signals to reflect scarcity rather than distort prices through direct subsidies, Mr Chee said such subsidies often have the unintended effect of being inequitable as they benefit people who consume more.
For example, some people had asked for subsidies or caps on energy prices, and pointed to other countries with long-term fuel subsidies.
Mr Chee said a family living in a bungalow would consume more electricity than a family in a three-room Housing Board flat, so a subsidy that lowers the price of electricity across the board would end up benefiting the bungalow dwellers more.
For a small country like Singapore, where fuel is imported and subject to global pricing, he added that it was not feasible to rely on permanent subsidies for these resources.
The Government, therefore, believed in keeping the resources at the right prices to encourage prudent consumption, which is crucial in resource-scarce Singapore.
Amid structural shifts, such as US-China contestation and its impact on global trade and supply chains, another shock that hit Singapore was the Covid-19 pandemic in 2020.
To tackle its effects, the Government worked to prevent long-term economic scarring and encouraged workers in affected sectors to upskill, said Mr Chee.
For the country’s hard-hit aviation and tourism sectors, extra help was offered in the form of higher wage co-funding and workforce retention grants, to help affected workers gain skills and explore automation and digitalisation.
As a result, Changi Airport was among the first in Asia to reopen to international travellers in 2021. Other countries took a shorter-term view of laying off workers to protect their bottom lines, noted Mr Chee.
Turning to the Government’s role in building infrastructure ahead of demand, Mr Chee cited the Tuas mega port as an example of how the authorities stayed firm on a long-term strategic view to prevent the Republic from falling behind.
He said that to avoid sinking in more capital and risking stranded assets, the Government could have taken a shorter-term perspective and maintained the status quo amid a global container shipping downturn in 2012.
But Singapore would have risked falling behind if it did not invest in the future.
As a conduit for the movement of critical resources, the port not only supports Singapore’s economic activities, but ensures that the nation stays resilient and relevant in the geopolitical space, Mr Chee added.
Slated to be fully operational in the 2040s, the Tuas Port is being developed in four phases, with nine of its 66 container berths already operating as at July. It will have a handling capacity of 65 million twenty-foot equivalent units, making it the world’s largest automated port.
Noting that the development of the port was based on a careful cost-benefit analysis, he added that the eventual consolidation of port operations would significantly reduce the cost of transport, labour and road congestion, and free up prime land in Singapore’s south for the Greater Southern Waterfront.
Mr Chee said Tuas Port is also expected to bring further private-sector investments to the business and industrial district in Singapore’s west.
Cautioning against going down the slippery slope of excessive individualism, populism and short-termism that have gained “dangerous traction in recent times”, he said these trends will have an adverse impact on Singapore’s ability to plan long-term and create sound economic policies.
Mr Chee said Singapore’s stable political environment, which encourages good politics, has allowed the Government to make economically sound and socially equitable decisions for the long-term benefit of the country and Singaporeans.
Good politics, he added, is rooted in integrity and a commitment to society’s greater good, with the long-term welfare of Singapore and people taking precedence over personal or partisan interests.
This is essential for building consensus, and securing public trust and support, Mr Chee said.
“Not only in good times, but also during tough periods; and not only to make popular decisions, but more importantly, also to implement difficult ones.”
https://www.straitstimes.com/singap...han-indulge-in-fiscal-fantasies-chee-hong-tat
fuck this cheebyekia
