Up to 50% of net investment returns from our past reserves managed by GIC and Temasek Holdings is treated as Budget revenue.
In fact for Budget 2017, 20% of the revenue for budget spending comes from GIC and Temasek.
This means to say that every $1 out of $5 that the government spends come from GIC and Temasek.
Some say, why not increase their contribution to more than 50%. That will not be prudent because the government also has to ringfence our past reserves against inflation and against any fluctuations in currency which can drastically reduce the size of our reserves in bad times.
A notable quote from George Yeo:
“For as long as Singaporeans think that the government is rich, they will say look, c’mon, pass some over. But in fact, we have nothing. We are only a small island. We have no natural endowments. And what we have – I don’t know how many hundred billion dollars we have, even if you double it, what is that, compared to what others have, in the ground, in land, underwater?
And in a crisis, if we have nothing, how do you sustain a diaspora? So yes, there must be a sense that the ordinary needs of a Singaporean has got to be looked after, and a proper balance between spending of the generation today and saving for the future generation. That balance is a political balance. The government now is re-tweaking the balance, re-calibrating it, fearing it will go too far, because that will consume itself, but knowing that if it does not proceed enough, then there is no deal in the first place.
NOTE: Typo on photo. Net Investment Returns* and not Net Investment Income*
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