Tuesday, February 03, 2009

SM Goh : Reserves not for social assistance

UPDATE: Someone brought my attention to the other large SWF (Sovereign Wealth Fund) that of Norway. They actually call it a pension fund because the purpose of the Norwegian reserves is to provide pension to the old in the country [Link] and it is fully transparent listing every single holding of the fund quarterly. Yes, some of you cynics will say that "Norway has oil" that is why they can afford to do this. Imagine if oil was discovered in Sentosa, you think the PAP govt will use the revenue to provide pension for the people? Nah, the PAP wouldn't waste it on the people. What we have all along, and will continue to have are our people and we were able to build these huge reserves because of the contributions of Singaporeans - we didn't need oil to do it. The fact is we accumulated reserves at a comparable rate as the Norwegians - the difference is they plan to give it to the people as pension. In Norway oil money = pension money for the people, the govt did not use the excuse that the money did not come from the people as an excuse to hoard the money as a crisis fund. In Singapore we don't have oil, every reserve dollar came from the work that you and I did, our parents did yet the PAP does not want to use it for the welfare of the people. The PAP govt did not even bother to say sorry when the lost billions in bad investments and insulted our intelligence by calling these long term investments. The reason why the PAP does not want to return the money to the people is they are treating the money like they own it. We don't even have the right to see the accounts.....
"The reserves should not be used for social assistance, nor for permanent programmes such as the Workfare Income Supplement scheme and ComCare, “no matter how meritorious” — these should be funded by current revenues" - SM Goh[Link]
"...but it is actually okay to put our reserves in troubled western banks and Shin Corp"
- Lucky Tan
"Third, no draw except under dire circumstances when one-off extraordinary measures are required to ward off catastrophe or prevent irreparable damage to the economy" - SM Goh.
If the govt of any other country made those statements, one would probably say that it makes sense to be prudent.
There are reserves and there are RESERVES (the gigantic one that Singapore build up)....these are my thoughts when I go through his remarks:
1. Reserves are for economic crisis. Agree? That is not the issue. Many countries keep money for such rainy days. The question is how much is enough? For current crisis of "one in a century" magnitude, the govt requested for $5B - less than 2% of our reserves. What is the other 98% for? Every dollar that goes into the reserves belongs to the citizens because they help to build the reserves and they have to work harder and longer to keep building the reserves. Does it make sense to have a "more the merrier" policy for building reserves?
2. Reserves not for welfare. Poverty is a crisis...a real crisis for the people who are poor. I can't think of a more direct and effective way of using our reserves than giving it to needy Singaporeans. Giving money to those in need in our society is never a waste - it is used for necessities .. medical care, food and clothing. Giving it to the old who worked all their lives so they can have a proper retirement is not a waste. Giving money to trouble western bank is a waste. Losing it in Shin Corp, Global crossing, and the endless stream of bad investments is a waste. It is not welfare spending that brought down the global economy, it is culture of greed. It is banks, hedge funds and incompetence not welfare programs that brought us this mess.
3. Prudence. The PAP govt has a habit of scutinising the extra $30 of public assistance given to the needy and they can debate all day about whether it is really needed. But there wasn't much debate when billions were sank into troubled western banks. Prudence for the PAP is to control tightly the money given to those that really need it while brushing away bad investment decisions as "long term investments" and honest mistakes. The PAP govt has given a whole new meaning to the word prudence.
The real reason for huge reserves is job creation. But it is job creation for the elites. There is no better job in the world than managing the funds of people to whom you don't have to answer to for losses.

Singapore minister says reserves not for welfare
Sun Feb 1, 2009 7:19pm IST Email Print Share Single Page[-] Text [+]

SINGAPORE, Feb 1 (Reuters) - A senior Singapore politician said on Sunday the government would dip into the country's reserves only in times of crisis and not use them to support welfare programmes. "As a general principle, the government must continue to fund such programmes out of revenues raised in the current term of government, not past reserves," former Prime Minister Goh Chok Tong said at a community event. "When this economic recession is over, we must continue our policy of growing our reserves by living within our means and running a modest budget surplus," added Goh, who was PM between 1990 and 2004 and now holds the title of senior minister. Singapore, a tiny city-state of 4.6 million, last month took the unprecedented step of drawing on its reserves to help finance a S$20.5 billion ($13.59 billion) stimulus package as its economy shrunk for the third consecutive quarter.

Even with the stimulus, which will result in a budget deficit of about 6 percent of GDP for 2009/2010 before investment income, the government says the trade-dependent economy and regional financial centre may contract by as much as 5 percent this year due to the global downturn. Goh likened the Singapore economy to a "speedboat in open sea" that will outrun bigger vessels in calm seas but was more vunerable when winds rise and the waves are high. Singapore's two sovereign wealth funds, Temasek [TEM.UL] and GIC, together manage over $400 billion in investments. (Reporting by Kevin Lim; Editing by Rupert Winchester/Greg Mahlich)


yamizi said...

I don't know why but my heart sank when I read this entry of yours...


Dog said...

Dipping into only 2% reserve because the major percentage had been invested offshore long ago.

Anonymous said...

Instead of using "building" the reserves, a more apposite adjective to use would be "hoarding".

Right the government is hoarding the reserves - or there may be nothing at all. Zilch, nada, zero!

Anonymous said...

Reserves are for a rainy day. By definition, rainy days come only once in every lifetime in Singapore because we have never ever used the reserves so far, until now.

Lost Citizen

Sgcynic said...

Not sure our government "leaders" view themselves as custodians or owners of the reserves. Miserly... Not sure what the purpose of the reserve is. Means to an end (what end?) or an end in itself.

Anonymous said...

For what are your possessions but things you keep and guard for fear you may need them tomorrow?

And tomorrow, what shall tomorrow bring to the overprudent dog burying bones in the trackless sand as he follows the pilgrims to the holy city?

And what is fear of need but need itself?

from The Prophet by Kahlil Gibran

Anonymous said...

half the pay of all ministers cos their salary rise has really overshot their productivity gains.

Pass this excess to the Public assistance scheme so that they need not look for hand outs from the welfare org. more bread, more rice.....

Amazing our MCYS minister can make millions and bemoan a $30 increase in PA.

Anonymous said...

Take a look of an article published on 3 Jan 2009 in wayangparty.com.
This shows how transparent the Norwegian Govt manage its public pension funds. In contrast, the general public in SG has no clue how the reserves is managed. It also begs the question of the reserves is built up for what purpose, if not for helping the needy in such dire moment of our history? How sad!!!

Anonymous said...

that is so fucked, and yet they win in every election.

the general public has to know about all these things, so that we can have change in Singapore just like USA.

Whenever I ask my friends about the government in Singapore, all of them fuck care, say i don't bother.

I can't wait for the day where they find themselves out of job, no money, tons of bills to pay, and then they will wake up.

Not to blame the government, but seriously, I think they have done a very bad job out of the reserves, and other stuffs.

My main factors for my hate towards them:

1. Foreigners displacing Singaporeans in the work force.
2. High salaries for them, even more than Obama and Putin, while ours don't do much for the country.
3. Making a mess out of the reserves, none of those go towards helping our citizens in dire need.
4. Very arrogant and screwed up ministers. Especially the one who defended his daughter if you all can remember. Blardy assholes, I hope I can burn their house someday...
5. Threatening the population that if Singapore falls, our girls would have to be maids in other countries. The funny fact is, I personally have been working almost like a dog, however, not in Singapore, but in Australia. I consider myself very lucky.
6. Revising university admission requirements so that their own kinds can go into uni. its damn kelong. Remember that 2nd language was not needed at one point? What do you think? Obviously someone's 2nd lang can't make it, and that someone is very important, I don't think we need to know who, but this someone HAS THE CONNECTIONS.

I'm sure you all can think of more.

Feel free to add to the list!

Someone sad for Singapore

The Reservist said...

Well, well, well!

When it comes to pumping money into toxic-laced banks or propping up the GLCs or paying the elites' salaries, billions and millions are available.

But when it comes to us commoners, peasants, our leaders are so tight-fisted as to, literally, squeeze blood from stone.

And this, during a "once in a lifetime" global financial distress.

Now, this is what I call a loss of moral authority.

DanielXX said...

Some moral authority has been lost after they emptied a bucketload of money into Western banks which ended up in the bonus payments of crooked bankers. Prudence? Sorry, but our garment can't take the high ground any longer.

For as long as I live, I will remember UBS, Merrill Lynch and Citi and the follies of 2007-8.

Anonymous said...

A silver lining for Singapore in this global financial crisis!

I believe Singapore has reached the point of no return. The first domino has been pushed.


Economist with a Heart :)

Anonymous said...

"Third, no draw except under dire circumstances when one-off extraordinary measures are required to ward off catastrophe or prevent irreparable damage to the economy" - SM Goh.

If you try to do that when you are under dire circumstances, chances the value of your reserve will most likely have to be disposed at a very deep discount.

After all, not all of your assets are in liquid form. I am sure some will be in the form of hard to disposed form like -- properties. And in the case of equities, there is a good chance if you try to offload those, people will short it.

It's a basic human instinct. If you are desperate to sell and if buyers know you are desperate, they are likely to screw you!

Then your "reserve" is probably not much use.

Anonymous said...

Budget surplus = too much tax.

SWFs by definition privatise profits and socialise losses. Without transparency, it is doomed for the taxpayer but good for the u-know-who.

So forget about TH & GIC lah and blame yourselves for stupidity/ and/or cowardice.

Btw, Norway's pension is also to prevent inflation from oil money.

Anonymous said...

Giving money to the citizen is a welfare.

But giving money to cash-rich companies is not a welfare.

Many singaporean intelligence and common-sense have been insulted many times by these MIWs

Anonymous said...

To anon at 5:53

well say.

It make me very angry too. But I am not a smart person. That's why I am still in this shit hole.