The basic premise of WP’s alternatives to the GST hike means using more of our Past Reserves and thus leaving behind less resources for our children, wrote Senior Minister of State for Finance Chee Hong Tat on Lianhe Zaobao on Nov 21.
“Putting aside theoretical arguments, the practical implications of the WP’s proposals are clear. If we were to adopt their proposals, we will leave behind less resources for our children and grandchildren in the future,” he said in his rejoinder to Associate Professor Jamus Lim’s rebuttal to a Zaobao forum letter.
The original forum letter opined that WP’s alternatives would raid our reserves and thus leaving less for the next generation.
Some of WP’s alternatives include spending more of the investment returns from our reserves or using more proceeds from land sales to fund current expenditure.
“Surely this cannot be a responsible thing to do, especially as we enter a world with greater uncertainties and challenges ahead of us,” said SMS Chee.
He added that it’s unfortunate that Assoc Prof Lim has continued to repeat the inaccurate assertions made by him and his colleagues in Parliament.
On Nov 18, Lianhe Zaobao published Assoc Prof Lim’s rebuttal.
In his Facebook post explaining his rebuttal, Assoc Prof Lim said that “slowing down the rate of accumulation of reserves can hardly be called taking from it”.
“It is like someone declaring that since they’ve cut down their meals from six a day to five, they’re now on a diet,” he added.
Secondly, he said that it’s not as if the money spent today is being squandered.
And lastly, he argued that spending that goes toward non-investment such as healthcare for elderly doesn’t mean selling our children short.
SMS Chee stated that the Government now uses up to 50 per cent of the investment returns from our Past Reserves as revenues for the annual Budget.
“We have already explained that this revenue stream will only keep pace with economic growth over the medium to longer-term. But our public spending needs, especially in the area of healthcare, are rising well above GDP growth,” he explained.
WP’s claims that there’s no harm spending more from our reserves or investment returns are mistaken, the SMS wrote.
“Imagine what would have happened if our forefathers had done what the WP proposed. Let’s say they had spent more of our reserves in previous years, and left us with 20 per cent less in investment returns today. Then the GST would have to increase to a higher rate of 11 per cent rather than 9 per cent, in order to close the funding gap and to ensure sufficient resources to look after our growing number of seniors.”