Firstly, investments in schools, worker training, research and development, as well as the flexibility to cut income taxes if needed, to keep the economy competitive.
Secondly, improvements to the transport network, housing estates and leisure areas to keep Singapore a top-quality home.
Thirdly, higher social spending as the population ages and the income gap between rich and poor widens.
========================
note above are mostly for FT- schools , R and D , transport are all FT infested areas. Social programs to help sinkies are LAST priority, if there is any leftover at all.
We singaproeans con into doing NS for nothing.
==========================
EXTRA funds worth more than 2 per cent of Singapore's gross domestic product (GDP) will soon be available for government spending each year.
The change, arising from a proposed amendment to the Constitution on spending of investment returns on reserves, will enable government income to keep pace with expenditure.
Money needed to help S'pore adapt
To stay competitive
# More resources for the education system, such as single session primary schools and lower student-teacher ratios.
... more
The latter is set to rise from the current 15 per cent of GDP to 18 per cent in five years' time, and by even more after that.
Based on last year's GDP of $243 billion, the new rule could add at least $4.86 billion to beef up the annual Budget.
The 2007 hike in the Goods and Services Tax from 5 to 7 per cent already adds 0.8 per cent of GDP a year to revenues.
The two changes are necessary parts of Singapore's new fiscal structure, Finance Minister Tharman Shanmugaratnam said.
The spending needs are in three areas:
Firstly, investments in schools, worker training, research and development, as well as the flexibility to cut income taxes if needed, to keep the economy competitive.
Secondly, improvements to the transport network, housing estates and leisure areas to keep Singapore a top-quality home.
Thirdly, higher social spending as the population ages and the income gap between rich and poor widens.
Now, the Government can spend up to half of the net investment income on the reserves, from interest and dividends paid out each year. These make up only a small portion of total investment returns.
The new spending rule sets the cap at 50 per cent of net investment returns (NIR), which include capital gains, that is, the change in the value of investments as prices rise.
Mr Tharman assured the House that the new framework 'strikes the right balance between the needs of current and future generations of Singaporeans'.
He added that the President, who safeguards Singapore's reserves, is also satisfied that the new framework is sustainable, preserves and grows the past reserves and will be in Singapore's interests.
To ensure a smooth stream of returns, the sum that can be spent each year will be based on a projection of the long-term expected returns over 20 years, and take into account the effect of inflation.
The new framework will apply to reserves invested by the Government of Singapore Investment Corporation (GIC) and the Monetary Authority of Singapore (MAS).
But it will not apply for now to Temasek Holdings' returns.
Mr Tharman gave two reasons for the exclusion.
Temasek takes major stakes in companies, a strategy that entails higher risks for higher returns. That makes it more difficult for the Government to project a long-term expected rate of return for Temasek with reasonable certainty, unlike for the GIC's global portfolio.
Temasek's investment strategy is also still evolving, after a major effort in 2002 to diversify its investments geographically and sectorally.
The Government will review the exclusion after some years. In the meantime, it will continue to tap up to 50 per cent of Temasek's dividends each year for its needs.
Mr Tharman also assured the House that the Government had designed a 'systematic and robust' process by which it determines the NIR before the start of each financial year.
First, the Government will propose the expected long-term real rates of returns for GIC and MAS for the President's agreement.
To do so, it will ask the GIC and MAS boards to provide estimates of the long- term expected rates of return on the assets they manage, taking all factors into consideration.
The President will consult with the Council of Presidential Advisers before deciding whether to agree with the Government's proposal. If he disagrees, then the average historical real rate of return over the previous 20 years will be used.
Although that rate is not ideal, Mr Tharman said it was a 'neutral and pragmatic basis for resolving any dispute between the President and the Government, and avoids paralysing the government of the day'.
This dispute resolution mechanism and other details and working arrangements for the new framework will be stated in a set of principles to be agreed upon by the Government and the President.
[email protected]
Secondly, improvements to the transport network, housing estates and leisure areas to keep Singapore a top-quality home.
Thirdly, higher social spending as the population ages and the income gap between rich and poor widens.
========================
note above are mostly for FT- schools , R and D , transport are all FT infested areas. Social programs to help sinkies are LAST priority, if there is any leftover at all.
We singaproeans con into doing NS for nothing.
==========================
EXTRA funds worth more than 2 per cent of Singapore's gross domestic product (GDP) will soon be available for government spending each year.
The change, arising from a proposed amendment to the Constitution on spending of investment returns on reserves, will enable government income to keep pace with expenditure.
Money needed to help S'pore adapt
To stay competitive
# More resources for the education system, such as single session primary schools and lower student-teacher ratios.
... more
The latter is set to rise from the current 15 per cent of GDP to 18 per cent in five years' time, and by even more after that.
Based on last year's GDP of $243 billion, the new rule could add at least $4.86 billion to beef up the annual Budget.
The 2007 hike in the Goods and Services Tax from 5 to 7 per cent already adds 0.8 per cent of GDP a year to revenues.
The two changes are necessary parts of Singapore's new fiscal structure, Finance Minister Tharman Shanmugaratnam said.
The spending needs are in three areas:
Firstly, investments in schools, worker training, research and development, as well as the flexibility to cut income taxes if needed, to keep the economy competitive.
Secondly, improvements to the transport network, housing estates and leisure areas to keep Singapore a top-quality home.
Thirdly, higher social spending as the population ages and the income gap between rich and poor widens.
Now, the Government can spend up to half of the net investment income on the reserves, from interest and dividends paid out each year. These make up only a small portion of total investment returns.
The new spending rule sets the cap at 50 per cent of net investment returns (NIR), which include capital gains, that is, the change in the value of investments as prices rise.
Mr Tharman assured the House that the new framework 'strikes the right balance between the needs of current and future generations of Singaporeans'.
He added that the President, who safeguards Singapore's reserves, is also satisfied that the new framework is sustainable, preserves and grows the past reserves and will be in Singapore's interests.
To ensure a smooth stream of returns, the sum that can be spent each year will be based on a projection of the long-term expected returns over 20 years, and take into account the effect of inflation.
The new framework will apply to reserves invested by the Government of Singapore Investment Corporation (GIC) and the Monetary Authority of Singapore (MAS).
But it will not apply for now to Temasek Holdings' returns.
Mr Tharman gave two reasons for the exclusion.
Temasek takes major stakes in companies, a strategy that entails higher risks for higher returns. That makes it more difficult for the Government to project a long-term expected rate of return for Temasek with reasonable certainty, unlike for the GIC's global portfolio.
Temasek's investment strategy is also still evolving, after a major effort in 2002 to diversify its investments geographically and sectorally.
The Government will review the exclusion after some years. In the meantime, it will continue to tap up to 50 per cent of Temasek's dividends each year for its needs.
Mr Tharman also assured the House that the Government had designed a 'systematic and robust' process by which it determines the NIR before the start of each financial year.
First, the Government will propose the expected long-term real rates of returns for GIC and MAS for the President's agreement.
To do so, it will ask the GIC and MAS boards to provide estimates of the long- term expected rates of return on the assets they manage, taking all factors into consideration.
The President will consult with the Council of Presidential Advisers before deciding whether to agree with the Government's proposal. If he disagrees, then the average historical real rate of return over the previous 20 years will be used.
Although that rate is not ideal, Mr Tharman said it was a 'neutral and pragmatic basis for resolving any dispute between the President and the Government, and avoids paralysing the government of the day'.
This dispute resolution mechanism and other details and working arrangements for the new framework will be stated in a set of principles to be agreed upon by the Government and the President.
[email protected]
