Resilience and Solidarity Budget 2020 – Speech by Leon Perera

Delivered in Parliament on 7 April 2020

Mr Speaker sir, in my last speech in this House, I talked about seeing the opportunities in this crisis. What a difference a month makes. I will not talk about opportunities this time. The focus should be on getting through this, to the other side – a post-Covid-19 world. Other things should not distract Singaporeans from this mission right now.

Before I begin I declare my interest as the CEO and a shareholder in a company providing research and consulting.


Pulling through together

Many of us feel fear right now. I would argue that what we should fight is not fear. Rather we should fight the twin evils of indifference, complacency and unscientific views on the one hand and unbridled panic on the other. A little fear may actually be helpful, keeping us on our toes and mitigating the risk that bad habits will return at the first sign of good news.

But it should be a little fear for everyone and not only a little fear for ourselves. That should come from trust in the scientific view that if most people get sick, no one will be safe as individuals or families. As the famous scientist Neil DeGrasse Tyson said, this Covid-19 crisis will put to the test a key question – does society listen to scientists? We all have a role to play in answering that question as a country.

All of us react differently to an event like this, based on our personalities, medical profiles, socio-economic circumstances and many things beside. It is easier for some to work from home than others, for example. Recognizing these differences means accepting that there will be questions, there will be discussions, there will be debate, trade-offs and yes, course correction.

It is unity that will ultimately breed success in this effort. But it is understanding that will beget unity. It is openness and accountability that will get us to understanding. And it is our democratic society, enshrined in our Pledge, that will beget openness and accountability.

On social media, there are many chat threads openly saying that authoritarianism has worked, democracy has failed. Look at China versus Italy and the USA. Yet some of the countries that have done well through this crisis thus far, like Taiwan, South Korea and Japan, have open, democratic systems. We would do well not to draw the wrong conclusions about democracy, as many who lived through the Great Depression of the 1930s did, with disastrous results for the world.


Resilience amidst crisis

The Resilience budget is to be welcomed. This is what the reserves principal has been saved to do. The Workers’ Party supports the idea of not touching the reserves principal except in times of crises, as I said in Parliament last month.

On that note, I would like to ask the Finance Minister – of this $48 billion supplementary budget and the $4 billion enhancements:

  • how much was obtained from drawing down past reserves – I believe this was $21 billion, which begs the next question-
  • how much was obtained from drawing on the surplus from this term of government?
  • has this surplus been drawn upon fully with this supplementary budget?
  • how much was obtained from other sources and what are those sources?

Next, I will speak about a few issues and potential gaps.

Firstly, on the most vulnerable in society. For those who are homeless, I know that wonderful Not-for-Profit Organizations or NPOs like Homeless Hearts of Singapore, New Hope Community Services and many others are stepping up efforts to help this vulnerable group. What are the outreach efforts being put in place by MSF and other arms of the government, and what support is being given to NPOs, to ensure that these extremely vulnerable people get access to medical and economic support at this time?

Secondly, on those staying in HDB rental flats. Over the past four years, it’s been my privilege to work with our volunteers to deliver assistance of various kinds to those living in rental flats in Serangoon and Bedok. Some of our beneficiary families have done all right. Two of our beneficiary families recently had children who qualified for entry to an autonomous university. I cannot tell you how that gladdened my heart and cheered our volunteers. Yet others are not doing so well and face multiple issues that hinder them and their children in the pursuit of a flourishing life. For those on Com-care awarded for a period of a few months, renewals are often an extremely stressful experience.

The government has said that eligibility for ComCare will be eased during Covid-19. My Parliamentary colleague Mr Faisal Manap has also spoken on this issue and made a few suggestions, with which I agree. I would like to ask: will the government confirm that it will defer HDB rent hikes, allow HDB rent deferment and extend current ComCare arrangements, wherever needed, at least for a decent runway amidst this crisis, say 6 months? Now would be the time to be pragmatic and not ideological about such questions.

Next, on our SMEs and micro-businesses. We need to get by until the economy comes back with pent-up demand. During this time, we should do everything practicable to keep viable SMEs and micro-businesses alive. If they are wound up, those entrepreneurs may not return, hurting employment and long-term economic growth, which needs domestic entrepreneurship to balance other sources of innovation and investment.

The Supplementary Budget has a host of measures for government risk-sharing in loans to SMEs. What if the loans do not get to our SMEs in spite of risk sharing? What if our banks simply don’t lend? Our business eco-system does not have the deep, historic ties between regional banks and SMEs seen in countries like Japan, Germany and Switzerland that are useful at times like this. Would the government consider a scheme like what has been introduced in the UK, the Term Funding Scheme, under which participating banks that lend to SMEs get to access lower wholesale funding costs from the central bank? Of course, banks could still choose not to lend; but at least, this would tilt the balance towards SMEs.

Of course many SMEs don’t want to take on loans, due to pessimism about their ability to repay after the crisis. This is where jobs support and rental deferment plays a role in preventing businesses from closing down, perhaps never to return. In cases where deferred rent cannot be paid back, will the government provide clear assurances that it will consider greatly extended deferment, where there is evidence that the company is viable? Extended deferment could be made conditional on the company paying the state back if and when it returns to decent, sustained profitability.

Next, on masks.  Reusable masks are to be self-collected at RCs and CCs. Anecdotal and social media feedback suggests that some people are reluctant to collect these masks for various reasons, including inertia and fears about the potential for exposure. Some wonder why self-collection was used when all are told to stay at home unless absolutely necessary. When I asked Minister Lawrence Wong about this in the context of distributing surgical masks in February, he said self-collection was used to minimise wastage. Our healthcare professionals don’t need reusable masks, or don’t need them as much as they need surgical masks, and hence there are fewer pressures on that stock. Moreover not that many masks are needed by households since they are reusable. If the government does not want to mail these masks out, can we at least arrange to mail reusable masks to those who prefer to receive them by mail –  by clicking on an online site or an app using Singpass, for example; or calling a hotline?


A post-Covid world

Next I shall talk about the lessons we can learn from this crisis, to better prepare for the next one, whenever that may happen.

Governments around the world are asking companies to shift R&D and production resources to make masks and ventilators. What powers does the government have to compel domestic firms to do the same? Even if legal powers are not deployed, is the government using its powers of persuasion and purchase to nudge domestic manufacturers to produce more of such critically-needed items, which may raise healthcare system capacity and scale-ability? Now might be a good time to test our ability to get such things done for when the next crisis hits. Of course, there are companies that are voluntarily doing this – it is commendable of these firms to do so.

Next, there is also news of other countries calling back retired healthcare professionals to serve, to address the kinds of potential manpower shortages Minister Gan spoke about in February. Is this being explored here?

Next, what long-term lessons can we draw in dealing with future pandemics? How does our number of ICU beds per capita compare with other countries? Can we use this crisis to form plans to expand beds at short-notice in acute care facilities, with plans to work with the private sector and retired professionals to augment the supply of equipment and personnel in a crisis?


Reserves and Unity amidst diverse Views

Lastly I would like to return to a theme I spoke about in February – slowing the slope of reserves growth.

A letter appeared in the Straits Times Forum on 28 March. Let me read it out in part. The full letter is available online.

“The reason why robust fiscal measures such as the Resilience Budget are possible is due to financial discipline and prudence, and growing Singapore’s reserves at a strong rate all this time. Had we, for whatever reasons, rested on our laurels and grown our reserves at a slower rate as was suggested before (Grow reserves at slower rate to invest in S’poreans: Leon Perera, Feb 28), the Resilience Budget would not be possible, and we would now be in economic dire straits due to the Covid-19 pandemic.”

I sent a reply to this letter on the same day, which the Straits Times Forum has not published, to the best of my knowledge. Please allow me to read out part of that reply.

“In 2008, the government introduced the Net Investment Returns framework, where half of the long-term expected real returns on relevant reserves asset classes can be used for Budget spending. In 2015, Temasek was added to this framework.

Both of these changes effectively slowed down the reserves growth rate. But surely, few of us today would argue that these changes were irresponsible because they slowed reserves growth. The funds so released have been put to constructive use in the Budget.

Our reserves have been estimated at over a trillion dollars. The best policies to govern reserves growth versus releasing more Budget funds should thus be different today from what they were in the past.

To use an analogy from the business world, a start-up company may need to conserve cash to manage cash flow. But when it has grown to the point where it has tens of billions in cash, corporate leaders should think about how that cash should be invested for better long-term growth and to benefit stake-holders, rather than growing the cash pile at the same rate as when the company was at the start-up stage.

In fact, the government’s introducing the current reserves framework in 2008 and adding Temasek in 2015 implicitly recognised this point. There can be over-saving, just as there can be under-saving.

Moreover, releasing more Budget funds can mean investing more in our people and our companies in ways that, if successful, would enhance the long-term potential growth rate for GDP, productivity and innovation. If this happens, tax revenue would rise in tandem with GDP, thus reducing the need to draw on the reserves and reserves returns.

Singaporeans should have fact-based, rational conversations on the right rate of reserves growth versus releasing more Budget funds. Such conversations need to address deep strategic and philosophic questions – like what the additional funds could be invested to do, balanced against what possible future emergencies could necessitate drawing down a massive percentage of these reserves. It is time to recognise that there can be reasonable viewpoints on both sides of this question.

In relation to [the letter-writer’s] last point, what we will have as a nation to weather the storm the next time crisis hits is not only our reserves but more importantly the solidarity, resolve and ingenuity of our people.”

I am sharing this now because to me, such debate and disagreement is really how we get to real Unity, real consensus formation.

Let’s look at the question of wearing masks out of doors. It now seems that the minority of naysayers who had called for that from an early stage onwards had a valid point, like the four doctors who signed an open letter to that effect in February. In noting this, I am not blaming anyone. There is no playbook for a crisis like this. Many of us were wrong-footed on this question, including the WHO. But that points to the continuing value of openness, transparency, debate and accountability, even in times of crisis.

Let’s debate big questions openly, rationally, sensibly, on the basis of transparency, to define an agreed set of relevant facts.

Let’s accept that there can be different goals and strategies that are consistent with the same facts, not labelling those with different views about those goals and strategies.

If we can get to that, we would be one united people who have built a democratic society – and one built to last.