Committee of Supply – Head M (Ministry of Finance)

The Chairman: Head M, Ministry of Finance. Mr Liang Eng Hwa.

Managing Government Finances

Mr Liang Eng Hwa (Bukit Panjang): Mr Chairman, Sir, I beg to move, "That the total sum to be allocated for Head M of the Estimates be reduced by $100".

As the key Ministry responsible for managing fiscal policies and financial sustainability, MOF plays a pivotal role to ensure prudent and efficient allocation of resources across the whole-of-Government.

During this period where our fiscal situation is a lot more constrained and yet our spending needs continue to rise sharply, we need to be even more judicious in managing how we spend and whether we achieve the intended outcomes.

The Government is, of course, a massive entity and it may not always be possible to have full visibility as to whether we achieve value-for-money in what we spend. At the same time, we must be mindful to strike a balance between the speed of responses versus ensuring governance and checks.

Can I ask the Minister how does MOF ensure effective allocation and productive use of resources so that we maintain fiscal accountability and sustainability, even as we are faced with the increasingly complex challenges that cut across Ministry lines, for example, cybersecurity, or even the setting up of our community isolation facilities? These are multi-agency tasks.

[Deputy Speaker (Mr Christopher de Souza) in the Chair]

How are we ensuring that the Government spends prudently and appropriately on big-ticket items such as our infrastructure where we are expecting more spending to come?

What are MOF’s efforts to drive accountability for outcomes of spending, especially for significant spending in response to the COVID-19 crisis?

Sir, Singaporeans must be at the heart of what we do, especially during an extraordinary crisis of this scale. In rendering support and relief to our businesses, families and workers, it would require the Government and agencies to work with decisiveness, speed and with empowerment. Assistance and relief support need to be timely and thoughtful to be meaningful, and to serve its purpose. How has MOF exercised agility and flexibility to flow assistance to businesses and citizens more expeditiously at the outset of the crisis and during the circuit breaker?

IRAS, ACRA and Customs are key interfacing agencies for businesses and citizens. From time to time, I do receive feedback and appeal requests from my constituents to expedite approvals and to seek waivers from these agencies that come under MOF. How is MOF working together with the businesses to develop innovative solutions and enhance productivity? How has MOF increased partnership and co-creation with the community in delivering solutions?

Sir, over the last one year, we have experienced unprecedented change in our way of life. Working from home and flexi-work arrangements become suddenly workable. Digital transactions, QR code, Zoom meeting, among others, is now the way to go for businesses and for individuals.

It has implications in Public Service and would require enhancements as to how public sector can serve and deliver services. How is the public sector gearing up for greater adoption of digitalisation among our businesses and society? In the case of MOF, what has the Ministry done to build capabilities in areas such as finance, procurement, grants management, shared services and internal audit?

Question proposed.

Fiscal Accountability

Ms Foo Mee Har (West Coast): Chairman, unprecedented Government expenditure has been incurred in the fight against the COVID-19 pandemic. It is important that proper controls, governance and accountability over the use of public funds are maintained, even as Government agencies react swiftly to the evolving pandemic situation.

Most importantly, support measures should be fair and must reach targeted groups, especially vulnerable groups such as low-income workers and families who have been disproportionately affected by the pandemic.

The Jobs Support Scheme (JSS) was by far the most significant cost item in the Government’s expenditure to fight COVID-19. It was a lifeline to many companies, helping them keep local employees on payroll. It was broad-based, benefiting all companies albeit at different support tiers.

With COVID-19 pandemic impacting industries and companies unevenly, questions have arisen on whether JSS could have been more targeted from the beginning, channelling differentiated and sustained help to impacted sectors and none to firms that are positively impacted. In some countries, such as Australia, eligibility for wage support only kicks in if business turnover drops by 30% due to the pandemic.

Whilst I appreciate it is easier to assess impact on hindsight, could the Minister share how the Government prioritised assistance and channelled funding support during the outbreak? What was the rationale to provide JSS across the board?

Sir, with increasing support directed towards new areas of development, including R&D and start-ups, the measurement of grants’ outcomes and success will need to evolve to different sets of parameters and time horizons. How does the Government evaluate the return on investments for such support schemes? What KPIs are used to track progress and success to ensure public funds are judiciously allocated?

Sir, as the Government will face major constraints in its fiscal position in the coming years, the value-for-money culture and accountability for the outcomes of spending cannot be more important. How is MOF deploying technology and data as the key enablers for agencies to better plan, collaborate and deliver public services more efficiently and effectively?

Case for an Independent Fiscal Council

Assoc Prof Jamus Jerome Lim (Sengkang): Chairman, fiscal councils are agencies staffed by professional civil servants which evaluate policy proposals to provide budgetary implications.

To-date, there almost 40 fiscal councils worldwide concentrated among advanced economies. Some are comparatively older. The Netherlands Bureau for Economic Policy Analysis dates back to just after the end of the Second World War while the Congressional Budget Office which serves both Houses of the United States legislature was founded in 1974.

7.45 pm

Others have more recent prominence but have, nevertheless, become rapidly influential. Canada's Parliamentary Budget Officer was established in 2006. The United Kingdom's Office for Budget Responsibility was formally constituted in 2010 and most fiscal councils within the EU were set up following the European Fiscal Compact in 2012.

Importantly, fiscal councils are independent and are expected to provide non-partisan assessments of the expected effects of policy on revenue and expenditure. As such, they serve as trusted public institutions that can help score, reform ideas and proposals to help ensure the economy's commitment to sustainable public finances. The support functions that fiscal councils offer include public assessments of fiscal plans and performance and evaluation of all provision of macro-economic and budgetary forecasts.

While these functions may already be performed to some degree by MOF, MOF reports to the government of the day. In contrast, the fiscal council will provide advice and the key here is advice as they do not possess any formal power to determine the Budget to the whole of Parliament at their request. As such, the Council will be available to scrutinise policy proposals offered by PAP backbenchers as well as Opposition parties.

I should point out that a proposal to form an independent Office of Budget Responsibility was raised by Mr Low Thia Khiang of the Workers' Party in 2017's Committee of Supply debates, This proposal builds on that, detailing the functions of the proposed agency and its service to the full legislature, and underscore the distinct macro-economic environment of the day.

There is evidence that fiscal councils can improve fiscal performance, especially when such Councils enjoy legal and operational independence, are tasked with monitoring fiscal rules and are supported by a robust media presence. Moreover, an independent fiscal council can be especially useful at this juncture in our economic evolution, given how we are currently running the largest Budget deficit since Independence, with substantial uncertainty over the likely future evolution of our economy.

Unlike the past where our Government has run balanced Budgets over successive terms and, hence, we may have had little need for this institution, there was an unprecedented deficit over the last term of Government which necessitated a draw on past reserves. I propose that the MOF consider the formation of an independent fiscal council, the Parliamentary Budget Office of Singapore seeded with an initial $20 million and tasked with the mandate to score all major policy proposals, formally advanced by Members of Parliament for budgetary and macro implications.

The Chairman: Mr Leon Perera, please, if you would like, take all three cuts together.

National Research Foundation

Mr Leon Perera (Aljunied): Mr Chairman, my first cut on National Research Foundation. The National Research Foundation is responsible for directing a huge amount of Government spending. The Research Innovation and Enterprise RIE 2025 Plan announced in December 2020 plans for investments of $25 billion between 2021 and 2025.

In other countries, we do hear anecdotally how government-supported R&D initiatives help seed IP to domestically based companies. In the US, for example, it is known that in the past, NASA might have seeded technology to American companies, technology that arose from the state-funded space effort. I have spoken in the House about this before.

The nexus between state research institutes and research centres on the one hand and local companies on the other, is not non-existent. For example, some new initiatives were rolled out in 2018 to try to ease the process by which local firms can engage with the R&D capabilities residing in our RIs and RCs. However, I still hear anecdotally that local firms find this process not altogether easy to navigate and that there is a perception that those local firms, able to write and present their proposals well or those that hire consultants, are best able to navigate this process as opposed to those with the best ideas.

I would like to suggest that the NRF be tasked with a number of hard mandates: firstly, that KPIs be set for engaging the local firms on co-generating or supporting the generation of commercialisable IP, with the economic impact and multipliers of that IP being measured and tracked going forward. This is in line with one of the themes of my Budget debate speech that we should score an "A" for outcomes, not only an "A" for effort.

Secondly can the NRF be given a more structured or built-in mandate to direct some of its spending towards green tech in ways that would help national and, indeed, global decarbonisation goals. The two objectives, of course, are not mutually exclusive.

Performance of Sovereign Wealth Funds

The second cut on assessing the performance of sovereign wealth funds.

Mr Chairman, Temasek and GIC, no doubt compare their performance against various global market indices and other standards of performance internally. It would be useful for these Sovereign Wealth Funds (SWFs) to publish these comparisons in the analysis for the reasons for better assessment of their performance. In fact, it would be useful for the Government in the form of MOF to understand these comparisons in some detail.

With that said, I would like to ask how does the MOF itself assess that the SWFs Boards and management have done a reasonable job in terms of returns. What internal metrics, indices and benchmarks and processes are used?

In the case of Temasek, the MSCI is used as a reference. As I understand it, Temasek also sets its own hurdle rate at a risk adjusted cost of capital that its market value TSR has under-performed on the one, three, 10 and 20-year periods, as of March 2020. It has argued that its under-performance relative to the risk adjusted cost of capital is because it is making a systemic shift to build resilience for the future. I would like to ask does the Government have clarity on the transformation Temasek is undertaking and why they think the future rate of return will outperform the current rate of return on these new investment strategies?

Reserves Draw-downs

Last cut on reserve spending. Mr Chairman, the reserves consist of various classes of assets held by Temasek, GIC and the MAS, if we are to exclude land banks.

During typical economic crises some asset value such as equities may fall on the whole. This is fairly typical. If a result draw-down is financed by liquidating assets in a time of crisis, this may not necessarily be advantageous for Singapore since it may mean selling fundamentally good assets, such as shares and good blue chip companies, for example, at low prices rather than hanging on to those assets to realise future value when the economy recovers.

However, if the reserves draw-down is financed by borrowing against the collateral of the reserves, that may in some circumstances prove to be more advantages to Singapore, especially given that interest rates may be lower in a time of global economic crisis as central banks slash the cost of credit to financial institutions as they often do. Or is the first line of execution for reserves draw-down utilising cash or cash equivalents held by the MAS or other institutions?

Hence, I would like to use this cut to ask the Government what is the operating principle that determines how reserves draw-downs are financed and executed with these considerations and questions in mind?

And in conclusion, I just like to add that I am aware that during the COVID-19 period, some sectors and some stock exchanges and market indices actually rose. In that sense, this crisis has been atypical. My comments earlier referred to more typical global economic crisis.

Leveraging Upstream Design to Cut Operating Expenditure

Mr Edward Chia Bing Hui (Holland-Bukit Timah): Mr Chairman, Sir, as the Government continues to fiscally strategise to meet long-term needs of our nation through investing in essential sectors, I would like to suggest that the Government adopt more upstream urban design ideas to optimise downstream operating expenses. This can reduce long tail costs.

For example, designing upstream and investing in an organic waste conveyance system cum digester as part of building or district. Organic waste is transported through a system of pipes to an onsite digester which could up-cycle waste into useful products. Such a system reduces overall cleaning and haulage cost due to lesser need for point-to-point transportation, allowing for a reduction in carbon footprint too. Value for money and value for good.

I also would like to recommend training in deep sector technical knowledge for relevant public officers so that procurement tenders are scoped with the best outcome. Creating more secondment opportunities for public officers to be attached to high growth Singapore businesses to gain first-hand experience would also be ideal. Having equipped with industry technical knowledge would allow for all translation work to be more effective, alongside with industry feedback and insights.

Finally, we need to further integrate the use of technology with design-driven solutions so that the user is at the center of all of Governments’ programmes and services. We can find the balance of being both cost conscious and outcome driven and embrace the importance of design in our public services.

Boosting Support to Local Businesses

Ms Foo Mee Har: Chairman, the Government can play an active role to give local businesses a leg up. Sir, I am particularly heartened by the support to our heartland businesses and hawkers by the partnership between MOF and Community Development Councils (CDCs) to give all Singaporean households $100 worth of CDC Vouchers to be used at participating heartland shops and hawker centers. This will not only go a long way to bolster the vibrancy of our local merchants but to foster a strong spirit of community and solidarity.

SingapoRediscover Vouchers is another excellent example of supporting local tourism at a time when they most needed it. The scheme was off to a good start, but it will need Government’s support to give it a boost in usage. The key challenge based on feedback from my residents is in navigating the various participating websites to look for something of interest. The current process of redemption seems time-consuming and complicated, especially to the less tech savvy.

Government can support businesses better by flowing assistance to them more easily, staying nimble and customising support. To achieve flexibility and agility, Government will need to gain new capabilities in setting more dynamic parameters and monitoring mechanisms. I would like to ask if the Government has leveraged AI, Artificial Intelligence, big data as well as analytics to achieve better outcomes in grant support.

Sir, there is much demand for the Government to enable local businesses to leverage publicly developed infrastructure and capabilities to catalyse development of industry’s eco-system. This is especially relevant with respect to datasets and applications specific to Singapore as part of our digitalisation efforts. How can Government developed APIs be shared with local businesses to support fast track development of new commercial applications? What plans are there to foster a closer partnership and cocreation with the local businesses in delivering solutions?

Enhanced Support for Firms and Citizens

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Chairman, 2020 was a year fraught with challenges. We saw an increased number of applications for financial assistance, be they from businesses or citizens. In response, a number of new schemes were very quickly introduced to address their needs, including the COVID-19 Support Grant, Jobs Support Scheme, Temporary Bridging Loan Programmes and many more.

Despite the wide array of support, I note that some have had to make appeals or request for further support. They were not aware of what supporting information to provide, or were found to be narrowly ineligible.

Can the Minister share how agility and flexibility have been exercised to avail assistance to businesses and citizens more quickly during COVID-19? And how are the involved personnel equipped to cope with the increased workload? Is there a need to enhance their capabilities?

Driving Environmental and Social Outcomes

Mr Desmond Choo (Tampines): Mr Chairman, there has been a growing global emphasis on Environmental, Social and Governance or ESG goals. This reflects expanded role of companies in driving our environmental and social outcomes. And there is still vast potential still to be tapped, especially for private companies.

Can the Ministry consider making it a requirement for larger private companies to report on their sustainability and gender diversity efforts in their annual returns? Their customers and business partners can then better decide how their resources can used to pursue our environmental and social aims.

I understand that some companies have stayed privately held because of business considerations, some of which might be compliance requirements of public listing. However, there are significant number of private companies compared to listed ones. The latter which already have sustainability reporting requirements. Private companies can provide the added impetus for our Green Plan and gender diversity aims. We can strike a good balance by limiting to companies above a certain level of turnover or manpower size.

8.00 pm

Next, can the Ministry also share on how Government grants are also used to drive sustainability and social outcomes? Can the Government share on its longer term plan to leverage on our procurement guidelines for good sustainability and gender diversity outcomes?

Sovereign Wealth Funds and Green Investments

Mr Leon Perera: Mr Chairman, I am heartened by the growing passion and quality of debate inside and outside this House regarding our climate challenges. Our sovereign wealth funds as global players should rightfully play a leading role in the effort to decarbonise. We could kickstart this by having our Sovereign Wealth Funds (SWF) adopt the PSTLES style framework directed by MOF.

First, it is good that Temasek has committed to half 2010 net portfolio emissions by 2030 and to deliver net zero by 2050, But this refers to only scopes 1 and 2 emissions. Can Temasek include scope 3's indirect emissions into its commitment since portfolio companies are often investors themselves?

On GIC's end, we have no visibility in its portfolio environmental targets, will GIC release this information?

While it may be impossible to disclose the full extent of investments, the declaration of standards companies must fulfil before a SWF can invest in them would be positive. Norway's SWF outlines concrete expectations of companies that it invests in and has an exclusion list on the types of companies that do not meet ethical and environmental standards. An explicit statement allows for accountability and sends a powerful message to the business community about what the Singapore brand stands for.

The Chairman: Mr Henry Kwek. Not here. Mr Louis Chua.

Additional Buyer's Stamp Duty Remission for Married Couples

Mr Chua Kheng Wee Louis (Sengkang): Chairman, with a 9% increase in private residential volumes in 2020 despite the absence of foreign buyers and despite COVID-19, the Singaporean aspirations of upgrading from public to private property is stronger than ever. Aspirations for better housing is particularly pertinent for residents aged 35 and below, with 73% aspiring to upgrade according to the HDB's latest sample household survey.

Enabling financially able Singaporeans to upgrade from HDB to private not only fulfils their aspirations, but it also eases demand for homes in the public residential market. While Additional Buyer's Stamp Duty (ABSD) has helped reduce excessive demand for property investments, it has also affected genuine HDB owners to upgrade to a private property.

An HDB owner today has to pay 12% ABSD upfront within 14 days of signing the S&P agreement for a private property if he or she has not already sold their current home. Given the rising prices of private property, 12% is no small amount, even though this could be remitted for married couples once they sell their first residential property within the specified timeline. This experience is different for a HDB owner who upgrades to an Executive Condominium (EC) or even buying another larger HDB unit. The Government grants semi-automatic ABSD remission providing them six months after collecting the keys to sell the flat.

Mr Chairman, this remission reduces the pressure of having to pay the ABSD in a short span of 14 days, a relief the HDB owners transitioning to private properties do not enjoy. I would like to ask if there is any rationale behind the absence of remission for a HDB to private property automatically, as a compared to HDB or EC upgraders. Would MND explore harmonising this remission to this group of citizens who wish to fulfil their housing aspirations?

Building Public Sector Capabilities

Ms Jessica Tan Soon Neo (East Coast): Mr Chairman, with the transformation and changes that we are witnessing, the public sector too needs to build capability to stay relevant.

A key role that the public sector plays is that of steward of public resources. Can Minister share what MOF has done to build up public sector capabilities in areas of procurement, grants management, internal audit and shared services to enable better governance, value for money and benefits for the businesses and citizens?

With digitalisation and the pace of change, traditional Government procurement processes will need to evolve as current tender procurement processes may not always work.

The effective use of technology and digitalisation enables agility, speed and the capability to do things differently. How has MOF leveraged digitalisation to strengthen public sector capabilities and processes, to transform the way work is done and improve how citizen services are delivered?

Transforming public sector services is not just about application of technology or digitalising. It involves relooking at how things are done and in some cases, completely new ways of doing things.

Digitalisation enabled by new technologies and platforms is also increasing citizen engagement and feedback with Government. This is changing the dynamics of citizen and Government engagement and will require public officers to have new mindsets, technology and leadership skills. How is the public sector developing public officers, bringing in new talent and competencies and ensuring the retention of subject matter expertise?

The Chairman: Minister Lawrence Wong.

The Second Minister for Finance (Mr Lawrence Wong): Mr Chairman, I thank the Members for their questions and comments for MOF.

The cuts by Members cover four broad areas: first, fiscal sustainability and accountability; second, managing our investments and reserves and tax-related matters; third, supporting social and environmental outcomes; and fourth, supporting businesses, citizens and community and enhancing public service capabilities.

I will speak on the first and second areas and my colleague, Second Minister for Finance Ms Indranee Rajah will cover the other two areas and the proposal for an independent fiscal council.

Mr Liang Eng Hwa and Ms Foo Mee Har raised important points and asked how the Government ensures prudent and effective allocation of resources, especially in such challenging times. And I want to assure both Mr Liang and Ms Foo that we take these issues very seriously, especially on securing good value-for-money and good outcomes with the resources that we have.

So, we continually prioritise and reallocate funds to key areas of greater needs across the whole-of-Government so that it is not just about additional spending but also about re-prioritisation. As an example, in the October Ministerial Statement, Deputy Prime Minister Heng highlighted that MOF had re-directed funding of about $8 billion from areas with reduced spending, such as development projects that were delayed due to COVID-19, towards funding our fight towards COVID-19. Clearly, something which was of priority.

Second, we have joint budgeting arrangements for cross-cutting domains, to better align priorities and reduce duplication of resources across different agencies. Joint budgets have been set up in the areas of jobs and skills, vaccines and therapeutics, Smart Nation and Digital Government as well as in Research, Innovation and Enterprise.

Ms Foo asked how we evaluate the return on investment for support schemes directed towards new areas of development. As with all Government programmes, we monitor the output and outcomes of our programmes and schemes to ensure that their purposes are met. We also review whether to scale, refine, or sunset programmes depending on their outcomes.

For example, for digitalisation programmes, we look at digital adoption rate and digital readiness across the sectors.

For enterprise development programmes, we monitor the growth of benefiting companies like revenue, to holistically assess how well the scheme objectives are met.

For Research and Development or R&D, we continuously seek to refine the way by which we assess and monitor the impact of our investments. We currently track a basket of indicators, which include Business Expenditure on Research and Development, the number of successful start-ups supported by Research, Innovation and Enterprise or RIE programmes, and the number of research projects that are undertaken in collaboration with the industry.

In this regard, Mr Leon Perera asked about enhancing the economic impact of research spending. This is an area where we share common objectives. We too in MOF would like to enhance the economic impact of everything that we spend. We want to achieve an "A" score not just for effort but for outcomes too. We want to have "As" in all areas.

We continue to place a strong focus on ensuring that RIE investments develop the capabilities needed to catalyse economic growth. At the same time, we recognise that some investments in basic research are essential and are important and they should continue to be maintained for laying the foundations of downstream breakthroughs. The nature of basic research is that they may not always have direct translational outcomes. Or even if they do, the outcomes may take time to materialise and manifest themselves. Mr Perera highlighted some examples in America. Indeed, if you look at the American examples or even in Israel, some of the basic research is done with very little direct and immediate outcomes because the economic outcomes bear fruits many, many years later.

In Singapore, we have a similar example of our biomedical sciences. We started investing in R&D in biomedical science in 2000. More than 20 years have passed. The initial years were not easy but we stayed the course. We had patient capital and today, our investments have set the stage for the flourishing Biomedical Science (BMS) sector. As Deputy Prime Minister mentioned just now in his Round-Up speech, the biomedical sector in Singapore today makes up about 4% of our GDP, and four of the world's top 10 drugs by global revenue are made in Singapore.

RIE activities have also helped to catalyse private sector research and innovation activity and to establish a vibrant innovation and enterprise eco-system.

We have created high quality jobs. The number of industry research scientists and engineers, or RSEs, has tripled. These are industry RSEs, not Government. Industry RSEs has tripled from about 6,500 to over 19,000, in the 20 years from 1998 to 2018. Beyond the immediate impact on RSEs, RIE investments have also indirectly contributed to good jobs in the rest of the economy, by keeping industries and businesses competitive globally.

In the same period of time, Business Expenditure on R&D has increased by more than two-and-a-half times, from $1.5 billion in 1998 to approximately $5.6 billion in 2018. So, these are the outcomes that we have achieved and we will continually strive to do better.

In response to Mr Liang's question on accountability for spending outcomes, we continue to strengthen governance and accountability over the outcomes of our spending, including strengthening the value-for-money culture across all Government agencies.

Infrastructure projects are evaluated for their worthiness and cost-effectiveness, before the Government embarks on them. For larger projects, Ministries' proposals and MOF's evaluations are further scrutinised by the Development Projects Advisory Panel, which comprises technical experts from the private sector and academia. Over the past five years, these processes have led to design improvements and generated savings of about $4 billion in total or about 5% of the capital costs.

For example, MOF worked with LTA to improve the proposed design for the Sengkang West multi-storey bus depot-cum-dormitory, including right-sizing the space for housing mechanical and electrical equipment and common areas, and green roof areas. These changes helped to reduce the estimated cost by about $70 million.

For day-to-day operational spending, public agencies also proactively look out for ways to spend prudently. For example, MOH's Agency for Care Effectiveness evaluates the clinical-effectiveness and cost-effectiveness of medicines, vaccines and medical technologies and then negotiates fair prices with companies. This has delivered total cost savings of $300 million between 2016 and 2020.

I also thank Mr Edward Chia for his suggestion on making greater use of design to optimise cost effectiveness over the lifespan of infrastructure projects. Indeed, the Government adopts a life-cycle cost perspective during upfront planning and in the design of infrastructure projects. This improves visibility of long-term resourcing requirements. It allows us to optimise the combination of upfront costs and downstream maintenance and operating costs.

In this way, we avoid having projects, be it buildings or infrastructure, that may be cheaper to build but are expensive to maintain and operate and, in fact, on an overall basis, end up being more expensive. And so, by taking this approach, we expect to bring about savings of 2% to 5% in total life-cycle costs over the long-term, which is a significant sum given that we spend about $15 billion to $20 billion every year on capital expenditure alone.

8.15 pm

Ms Foo spoke about the need for governance and accountability over the use of public funds, even as we were responding to the COVID-19 situation. Indeed, when coming up with support schemes, agencies do make full use of a whole range of tools. They considered the possibilities of fraud and unintended beneficiaries upfront in scheme designs. They deployed various monitoring mechanism and safeguards, at pre-disbursement and post-disbursement stages, to ensure that funds are disbursed to the appropriate beneficiaries.

Specifically, on the Jobs Support Scheme (JSS), this was introduced at the start of the crisis when the public health and economic situation was highly fluid, and when firms were facing immediate cashflow issues. The priority then was to ensure that all firms received timely support, so that they could focus on retaining their workers and sustaining their operations. The JSS was implemented as a broad-based scheme then, without the need for onerous applications. This was especially helpful for SMEs.

As the economic situation improved and with actual data on sectoral and firm performance, we then stepped down our broad-based support measures and pivoted towards more targeted, sector-specific measures. In fact, we began tapering JSS support levels from September 2020. For sectors that managed well, we ceased JSS support after December 2020.

In this Budget, we extended the JSS for Tier 1 sectors like aviation and tourism by six months. For Tier 2 sectors like land transport and retail, we extended by three months. For sectors that remain hard hit, we also introduced additional targeted measures like the SingapoRediscovers Vouchers to stimulate domestic tourism, and extended sector-specific support like the Aviation, Point-to-Point Support Packages and the Arts and Culture Resilience Package.

This tiered approach has enabled us to bring targeted relief to business owners and the workers they are responsible for. We will continue to monitor the outcomes and effectiveness of COVID-19-related schemes. For example, MOF has published its interim assessment of the initial effects of the Government's measures to reduce business costs, save jobs and support families. Preliminary data suggests that the Jobs Support Scheme has reduced job losses in vulnerable firms, while loan schemes have supported over 20,000 firms in accessing loans.

Next, let me talk about managing our investments and reserves.

Mr Perera asked about the performance of our investment entities. We have had this debate before, this question has been raised multiple times and I have explained that both GIC and Temasek are long-term investors. Their remit is to secure good sustainable returns on a total portfolio basis over the long term.

So, the relevant performance measure for them is not the year-to-year return which can fluctuate because of market volatility but sustained long-term returns over and above global inflation. If you look at that measure, both GIC and Temasek have indeed performed creditably over the long term. Their results are published in their annual reports and there is a full writeup explaining their decisions, their performance and the evaluation of their performance.

Take GIC as an example. GIC in recent years, has recognised that there is high uncertainty in the equity markets, as well as high valuations, which can lead to large permanent portfolio impairment. As a result, GIC has undertaken pre-emptive measures to reduce portfolio risks. Nevertheless, despite reducing its risk exposure, GIC's returns on its portfolio, compared to a reference portfolio comprising 65% equities and 35% bonds; GIC's performance, despite a reduced risk, has been equal, if not better, than the reference portfolio. This has been so, over the rolling 20-year period. It has also been so over more intermediate periods, like a 10-year and five-year timeframe.

So, I think if you look at the overall performance on the broader term, longer term, not just year-to-year, I think both GIC and Temasek have done creditably well in a very challenging investment environment.

Going forward, how do we ensure that such performance continues? There is never any guarantee in investments. But all the processes are in place, by the Boards who supervise management, between MOF and the Boards to review the performances of these entities, and in discussions with external parties as well as investment advisory panels. Very prominent names in the investment community sit on these advisory panels to help us guide our two entities.

On green investments, we have explained that both GIC and Temasek operate on a commercial basis, so their individual investment decisions are independent of the Government. Nevertheless, both entities acting on their own accord, emphasise sustainability in their investment activities, and that is because they recognise that good sustainability practices are good for business and can have a positive impact on long-term returns. Conversely, companies with poor sustainability practices carry business and reputational, as well as environmental, social and governance risks.

GIC and Temasek integrate sustainability considerations holistically into their investment processes across all asset classes, so that they protect and enhance the long-term value of their investments. Both entities take a strong interest in not only understanding sustainability-related challenges, but also the opportunities for innovation, business growth and new investments.

Both entities also support efforts by the Financial Stability Board's Task Force for Climate-related Financial Disclosures, or TCFD, to develop an internationally accepted framework on climate reporting. This provides a framework for companies to disclose their climate-related strategies, and for investors to incorporate climate change considerations into long-term investment decisions. Both entities have also published comprehensive statements on their approach to sustainability and they will continue to review what additional information can be pulled out in their annual reports.

In response to Mr Perera's question about reserves spending, let me just explain how the Government executes the spending of reserves during economic crises.

The fiscal framework in the Constitution requires the Government to spend within its means. A draw on Past Reserves occurs if our revenues and surpluses accumulated during the current term of Government are unable to support our current spending.

The Chairman: Minister, if you would like to pause, we have arranged for some water.

Mr Lawrence Wong: Okay, I think that might be better.

The Chairman: Yes.

Mr Lawrence Wong: It is not a bug, I assure you.

The Chairman: And we would not steal your time; the timer has stopped.

Mr Lawrence Wong: Thank you, Mr Chairman. Much obliged.

I was talking about dealing with the issue of the execution of the spending of reserves. So, in terms of our fiscal framework, we have clear rules on what constitutes a draw on past reserves, but where the Government obtains the cash to pay for expenditures is a different matter. That is part of the Government's overall cash flow management. It is an operational issue and is separate from the budgeting process.

For purposes of cash flow management, the Government has a range of liquidity sources it can tap on, and this would include tax revenues which come in at different times of the year, funds raised outside the Budget, like proceeds from land sales. Constitutionally they do not contribute to the Budget and do not count as Government revenues, but they are part of the cash flow that the Government receives. It also includes Government deposits which we can draw on for purposes of cash flow reasons.

So, all of these cash flows are pooled together and all of the sources of liquidity are pooled together and we manage cash flow on a disciplined and integrated basis. On top of these different sources, I have highlighted earlier in this House that the Government will be issuing Cash Management Treasury Bills. This is part of the Government's ongoing efforts to expand our cash management tool kit.

With regard to the specific question asked by Mr Leon Perera, to pay for expenditures in fiscal year 2020, the Government was able to tap on all available sources of cash under the tool kits which I just described. So, GIC was not put in a position where it had to liquidate investments under time pressure.

Finally, let me address Mr Louis Chua's questions about the Additional Buyer's Stamp Duty, or ABSD, remission for Singaporean married couples. The aim of ABSD, I think we all know, is to moderate demand and to ensure a stable and sustainable residential property market. To be effective as a measure to moderate demand for property, ABSD has to be applied consistently and to all buyers.

Only one exception is made, namely that is for Singaporean married couples. A Singaporean married couple may need to change homes due to changing family needs, such as when they have children, when their children are growing up, or when the couple needs to right-size in their senior years. It is in this context that we have an ABSD concession for Singaporean married couples buying a second residential property.

Under this concession, we allow Singaporean married couples to claim a refund of the ABSD paid on their second property, provided they sell their first property within six months after the purchase of a completed property, or the Temporary Occupation Permit date of an uncompleted property. For those who are purchasing a HDB flat or a new Executive Condominium, they are granted upfront ABSD remission, as Mr Chua highlighted. This is because, they are subject to HDB regulations which require them to not own another residential property and to dispose of their existing property within HDB's stipulated timeframe. There are no such regulations for private residential properties and that is the reason why for such private residential property purchases, ABSD remission is only granted upon the sale of the first property within the required timeline, unlike the case of HDB.

Mr Chairman, MOF is committed to ensuring that our overall fiscal system is fair and progressive, achieves good value-for-money outcomes, and importantly, sustainable over the long term. The Second Minister Ms Indranee will now address the other questions.

The Chairman: Minister Indranee Rajah.

The Second Minister for Finance (Ms Indranee Rajah): Thank you, Mr Chairman. Let me address the independent fiscal council and also earlier on, during the debate on the Budget Statement, there were a few confused looks around the Chamber, so I thought it will be helpful if I just explain what that was about.

Mr Pritam Singh had suggested a Parliamentary Budget Office. In his response, the Deputy Prime Minister had referred to that as having a $20 million budget being requested for it. The reason why that was referred to was because, when Members of Parliament file cuts, they have to give an indication of what the cut is about, so that the Ministry can prepare. And in this case, Assoc Prof Jamus Lim had filed his gist that he proposed that MOF consider the formation of an independent fiscal council or the Parliamentary Budget Office of Singapore, seeded with an initial $20 million.

Hence, I sought clarification from the Leader of the Opposition whether his Parliamentary Budget Office was the same as the independent fiscal council and the Leader of the Opposition kindly confirmed that they were actually the same. There is only one council that he is talking about. And we heard Assoc Prof Jamus Lim just now, who has confirmed that what he is asking is for a council that is set up at a proposed cost of $20 million. This is just so that everybody knows what everyone is speaking about.

So, let me address Assoc Prof Jamus Lim's cut. In assessing the value of such a proposal, the fundamental starting point must always be: why? What is the need to be addressed? The Assoc Prof Jamus Lim ran us through various independent fiscal entities around the world. I will refer to them as Independent Fiscal Institutions, or IFIs.

So, it is important to first understand the context in which such institutions are established. The setting up of IFIs around the world took place mainly in the aftermath of the Global Financial Crisis in 2008 and 2009 where government deficits and debts were high.

8.30 pm

There were some which were established beforehand, for example, in the US and the Netherlands, but, primarily, the largest bulk of them were established after the Global Financial Crisis.

So, more than half of the IFIs in the OECD today were established after the Global Financial Crisis and the main intent was to prevent future fiscal crises.

In those cases, fiscal rules had proved insufficient to ensure prudent management of the public finances before the crisis. IFIs were set up to safeguard fiscal discipline, eradicate unreliable budgeting and rebuild public trust in policy-makers' capacity to manage public budgets prudently and transparently.

However, the context in Singapore is very different. The ills which led to the need for IFIs in other systems are not present in our system and we continue to keep a very strict eye on our fiscal prudence. Markets have confidence in our system. We are among the small number of countries today that continue to enjoy a AAA credit rating.

The Government has been disciplined in keeping to our fiscal rules and safeguards. We have run balanced Budgets in each term of Government, barring major crises. The draw on past reserves for COVID-19 relief, which was a crisis situation, was done in accordance with our Reserves Protection Framework.

We have put in place a strong system to scrutinise spending and debate budgetary matters, without incurring the costs of setting up additional fiscal monitoring institutions.

The Constitution requires us to run a balanced Budget over each term of Government and any departure would require the approval of the President.

The Government is required under the Constitution to seek Parliament's approval for its expenditure and revenue during each year's Budget.

The annual Budget Debate and Committee of Supply (COS) provide the opportunity for Members of Parliament to debate on and scrutinise Government policies and programmes.

Under the Constitution, the Government cannot draw on the reserves accumulated by past terms of Government without the approval of the elected President.

There is a standing Parliamentary Select Committee, the Estimates Committee, which examines the Government's Budget.

The Government's accounts are audited by the Auditor-General's Office. The AGO's findings are reported to the Public Accounts Committee (PAC), also another Parliamentary Committee, which can call on the relevant agencies to explain lapses or take corrective actions.

More importantly, the Government has been upfront about the hard choices that we make on budgetary matters. For example, we have not shied away from highlighting the need to raise taxes to meet longer term increase in healthcare and social spending needs.

Robust, intellectually honest analysis is important to foster more informed parliamentary debate. But ultimately, there is no substitute for having the political courage to make difficult budgetary choices.

Members of an independent fiscal council are not elected representatives in Parliament. Their role is to advise, but the responsibility for making difficult decisions ultimately lies with the elected Government. Alice Rivlin, the founding chair of the US Congressional Budget Office, said this very well. She said that IFIs, I quote, "can play an important role in ensuring realistic and well-informed debate based on honest numbers, focusing attention on the consequences of action (or inaction), and identifying more or less sustainable solutions to budget dilemmas. They cannot instil political courage to make unpopular decisions. Political leaders have to do that for themselves".

Setting up an independent fiscal council will not substitute for such courage. It will also not miraculously remove the structural drivers for higher healthcare and social expenditure, nor will it delay any painful changes.

Based on the experience of other countries, did the setting up of IFIs solve their fiscal management issues? No, because, ultimately, we cannot outsource honest and upfront debate.

We should focus our time and our energy on having robust, honest and constructive debates, deciding on the trade-offs and not delegate that responsibility to a third party.

Forecasting is an inherently uncertain exercise, and independent institutions are not exempt from this uncertainty. So, the Office for Budget Responsibility, or OBR, in the UK has actually been criticised for overly optimistic forecasts and has had to downgrade its forecasts several times since it was set up.

We recognise that there will always be uncertainty in forecasting and fiscal planning, but we cannot wish away more fundamental drivers of expenditure, particularly the increase in public health expenditure, as our population ages.

Mr Chairman, I move on now to address some of the other cuts.

On supporting social and environmental outcomes, Mr Desmond Choo asked how we can drive environmental and social outcomes through our funding and corporate regulatory levers.

MOF allocates public resources, and uses tax, charges and corporate regulatory levers, in order to achieve broader societal objectives, including social and environmental outcomes. These measures work alongside public education efforts.

We have more than doubled our spending in the social and environmental sectors over the last decade, and we have achieved good social outcomes.

In the area of gender equality, Singapore reports our progress regularly to the United Nations Convention on the Elimination of All Forms of Discrimination Against Women. We have done relatively well in areas such as higher education attainment, and are closing the gender gap in labour force participation rates and wages.

However, more can be done. In some metrics, such as women in corporate leadership, we still lag behind the most progressive countries. Women still shoulder most of the care-giving burden.

For environmental outcomes, we have one of the lowest carbon emissions per dollar of GDP in the world. Building on this, we are working towards peaking our emissions around 2030, and achieving our long-term net-zero aspirations as soon as viable. To do so, we are supporting businesses and households to become more energy-efficient, among other initiatives. Businesses can tap on EDB's Resource Efficiency Grant for Energy (REG(E)) or NEA's Energy Efficiency Fund (E2F) for funding support to adopt energy-efficient technologies. However, there remain areas of improvement, such as our domestic recycling rate, which we hope to increase to 30% by 2030.

On procurement, environmental sustainability requirements are already part of the consideration. For instance, agencies are required to buy energy-efficient appliances, and Government buildings are required to achieve Green Mark standards. We will continue to enhance these requirements in support of GreenGov.SG.

Mr Choo also suggested using the corporate regulatory lever. There are existing disclosure requirements for listed companies. For example, the Code of Corporate Governance requires listed companies to disclose their board diversity policy in the company's annual report. The Singapore Exchange (SGX) Listing Rules require listed companies to prepare annual sustainability reports.

The Government is mindful that a unified international sustainability framework has yet to be agreed upon and is monitoring international developments closely. We will take these into account in studying when it would be feasible and timely to introduce sustainability reporting for non-listed companies.

Besides the efforts made by the Government, businesses, organisations and individuals must all play their part in changing their mindsets and accepting new societal norms. I encourage the various stakeholders to step up and help us achieve better environmental and social outcomes together.

I move on now to the other cuts.

Mr Liang Eng Hwa, Ms Foo Mee Har and Mr Saktiandi Supaat asked how MOF exercised agility and flexibility to flow assistance quickly to businesses and citizens. In response to COVID-19, our priority was to flow assistance to those affected as quickly as possible.

For example, the CPF Board and the Inland Revenue Authority of Singapore (IRAS) enhanced their processes to speed up disbursements of the Jobs Support Scheme, or JSS. This enabled the JSS payouts to be brought forward by three months, from July 2020 to April 2020. The JSS has helped to keep our unemployment rate in check.

We also facilitated faster payment to Government suppliers to ease their cashflows. During the pandemic, we went the extra mile to pay businesses as early as possible, rather than when the payment is due, which is typically 30 days from the invoice date. As of end January 2021, about 90% of invoices less than $5,000 were paid within an average of 12 days, benefiting about 4,500 businesses, comprising mostly SMEs.

We exercised flexibility in applying regulations on businesses in view of the COVID-19 disruptions. The Accounting and Corporate Regulatory Authority, or ACRA, extended the deadline to hold Annual General Meetings (AGMs) and file annual returns for companies. ACRA also worked closely with MAS, Singapore Exchange Regulation and other agencies to facilitate virtual AGMs. An estimated 120,000 eligible companies can benefit from this.

Mr Saktiandi also asked how we coped with the increased workload. The Public Service mobilised manpower resources within and across agencies to help our frontline operations. On top of that, we also hired temporary staff. For example, MSF hired more than 300 temporary staff in 2020, with many redeployed from the aviation sector, to ensure prompt accessing of the COVID-19 Support Grant.

I agree with Ms Foo Mee Har that it is important for the Government to step up our collaborations and increase partnership to co-create solutions with businesses and the community.

Through a mix of traditional and digital media and engagement platforms, we reached out to 50% more Singaporeans during our recent Budget engagements, as compared to the previous year. We received suggestions from close to 9,000 Singaporeans. Agencies considered the suggestions and refined our support scheme parameters to benefit more citizens and businesses. For example, we carefully evaluated feedback and included the coverage of qualifying shareholder-directors' wages under the JSS since May 2020.

Mr Chairman, I notice that my time will be running out, and I do have a little more to cover. Since we are still within the guillotine time, may I have your permission to continue?

The Chairman: You are, indeed, correct. Please do carry on.

Ms Indranee Rajah: We are stepping up our partnerships with businesses, community groups and citizens to create policy solutions together.

For example, the Technology Hub for Non-Profit Organisations (NPO) initiative, was an idea that originated from the NPO leaders to accelerate the digital transformation of the non-profit sector during COVID-19. Tote Board partnered MCCY, MSF and NCSS and worked with IT companies to put together this one-stop shop, providing a variety of shared-service IT manpower, programmes and digital solutions to NPOs.

Mr Liang Eng Hwa, Mr Edward Chia and Ms Jessica Tan asked about MOF's efforts in building up public sector capabilities and strengthening functional leadership.

MOF is leading efforts to raise public sector capabilities in essential functions, such as finance, procurement, grants management, shared services and internal audit. These functions play vital roles in ensuring the Government spends prudently, effectively and accountably. When these functions perform well, agencies can focus on their core missions of helping businesses, citizens and the community. MOF has re-organised ourselves and formed dedicated offices to drive these efforts.

To strengthen grants management, MOF established a new grants governance framework last year that sets out rules and guidance that cover all stages of a grant – from grant design, approval and disbursement, to monitoring and fraud detection. The Grants Governance Office was formed to drive its implementation and raise agencies' capabilities to ensure proper financial governance.

8.45 pm

We are transforming Government procurement to buy more smartly and effectively. MOF set up the Government Procurement Function Office last year to drive efforts to transform and strengthen the Government's procurement function. We are taking further steps to consolidate the procurement of facilities management services of Government buildings. A central team with deeper expertise would manage these premises, instead of smaller, decentralised teams. This provides the scale for service providers to adopt more innovative, less manpower intensive solutions to manage the facilities, and is in line with our industry transformation efforts.

As a start, we have consolidated the facilities management of The Treasury and Revenue House. This has resulted in estimated annual savings of $1.2 million. It also enabled the adoption of innovative technology solutions that facilitate workflow automation, data analytics and access to real-time data, which has improved service delivery at reduced costs.

As Mr Chia pointed out, we need to develop public officers with deep sector technical knowledge. The Finance and Procurement Academy set up by MOF is working with agencies such as the Building and Construction Authority and GovTech to deepen technical know-how in specialised procurement areas such as contract management for construction and Infocomm Technology. We will also be facilitating attachment stints and exchange programmes with the private sector to enable our officers to stay abreast of the latest professional and industry developments.

In response to Ms Foo and Ms Tan's questions, as we strengthen the public sector capabilities and processes, we are also adopting more pervasive digitalisation in our processes. These efforts also help spur digital transformation in the private sector. For instance, MOF and GovTech are partnering businesses to co-create a solution which facilitates public officers to make smaller value purchases on commercial digital platforms.

We are currently piloting this with Eezee and Shopee, and will be onboarding more e-commerce platforms progressively in the coming months. This solution not only helps us save processing time, it also incentivises vendors to digitalise and bring their businesses online.

Ms Foo also asked if local businesses could re-use Government developed capabilities. Minister Vivian Balakrishnan earlier mentioned various collaborations between Government and the private sector, like SGFinDex, to deliver solutions. GovTech has also launched the Singapore Government Developer Portal in December 2020. This one-stop resource site enables tech developers to discover the latest Government IT solutions to build on and integrate into their applications.

Mr Chairman, in conclusion, the Public Service continues to enhance its capabilities, and is committed to working with the community and businesses to position Singapore to grow and thrive for the long term. Let us work in partnership so that Singapore can emerge stronger together.

The Chairman: We do have some time for clarifications. Mr Liang Eng Hwa.

Mr Liang Eng Hwa: Thank you, Sir. Last year, we had an extraordinary year. As we battled the COVID-19 crisis and the public sector had to respond almost on the move and to make time critical decisions, and probably with no SOP manual to reference from, whether it is to set up the massive community isolation facilities or with the under urgency of time for the foreign workers. These are all unprecedented things that the public sector did last year.

So, can I ask the Minister. We know that MOF does have very strict procurement policies and processes. I read a lot of this in the AGO reports where the lapses were picked up and so on. So, in the situation such as this, with the urgency and the exigencies, needs, how has our procurement process been able to allow for such situations to be managed? And then, whether there is the provision of waivers and so on for such acts?

Mr Lawrence Wong: Mr Chairman, I thank Mr Liang for the question. In fact, this was raised last year too, when we were in the midst of, well, we still are in the midst, of fighting COVID-19, but at the height of the pandemic last year when we had a huge outbreak. I think some Members had asked questions about the processes in which these procurements could be done quickly. I had explained then that we do have Emergency Procurement provisions in place where for such cases, there are provisions for agencies to make use of these Emergency Procurement provisions in order to buy services more promptly. And indeed, these were made use of last year during the crisis and when we had, in particular, to respond very quickly.

I think since then, the situation is more stable. Processes have been put in place. Agencies are able to respond in a much more coordinated and effective manner, but we never take anything for granted because the situation is highly unpredictable and new threats, new challenges may always emerge over the horizon.

The Chairman: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim: Thank you, Chairman. I would like to thank the Minister for what I believe is a very thoughtful defence of why this Government has historically had an admirable track record in its fiscal affairs. And I would put on the record that I agree that this, in fact, is the case.

That said, I wonder first if the Minister is also suggesting that our macro-economic and fiscal environment today is as unchanged as it has been historically, and even in the midst of the largest reserve drawdown in our history? And would not a second opinion on how our fiscal prospects are going forward into the future be valued, especially, as I emphasised in my cut, that this would be in the form of advisory nature rather than as law?

The second point that I thought would be useful to point out is that in the proposal, I had indicated that the independent fiscal council would actually serve all of this House. And so, if by implication, does that mean that we should regard all proposals by all Members of this House as equally, fiscally credible that whatever estimates provided should be regarded as equally trustworthy as long as they are put on the table. So, in part, you can think of it as not purely a constraint on the Government, which does have a very good track record, as I have explained, but also on proposals that are offered by Members of this House. They may not have enjoyed as long and illustrious a track record.

Ms Indranee Rajah: Mr Chairman, I thank the Member for his clarification. I am sorry, I did not understand the second clarification. Could the Member repeat it or explain it in clearer terms?

Assoc Prof Jamus Jerome Lim: I would be happy to. So, my suggestion in the cut was that the independent fiscal council, the Parliamentary Budget Office, whatever we wish to call it, would serve the full Parliament. So, all Members of this House would be able to pose requests for scoring of policy proposals that are advanced.

So, my question was if the Minister or the Ministry believes that in the absence of such a fiscal council, are all suggestions about policy, even if it is self scored by us, and not by an independent fiscal council would be treated with the same regard?

Ms Indranee Rajah: Mr Chairman, I thank the hon Member for his clarification. Let me take them in turn. So, the first one he asked whether I thought that the macroeconomic fiscal environment is unchanged and whether or not a second opinion would be valued.

On the first one, of course, it has changed. The world has seen the biggest crisis in a century, which was when the last global pandemic was around. So yes, it has changed, but the important thing is this – what is the difference between Singapore and the other countries who have needed the IFIs or their own fiscal councils? They got themselves heavily into debt. They borrowed. They would not raise taxes when they needed to. Some did not display the political courage that was needed in order to maintain a balanced budget.

Singapore on the other hand – thanks to the foresight of our pioneering PAP leaders – set aside our reserves, refused to squander the reserves, put in place a constitutional framework which required us to run a balanced Budget and to make sure that any time that we had to dip into the reserves, it was for good reason and put in place a framework where you could use the income on the reserves, but set in place a certain limit.

All of these things are what set Singapore apart, and that is one of the reasons why we do not need a financial council like this.

And earlier on in his answer, the hon Member referred to the Office for Budget Responsibility (OBR) in the UK and referenced a cut made by Mr Low Thia Khiang some years ago. The hon Member was not in the House at that time, but I would like to read out an excerpt of what I had responded to Mr Low at that time, which is still relevant today.

When the OBR in the UK was set up, it was done so by the Chancellor of the Exchequer, the Rt Hon George Osborne, and this is what he said when he set up the OBR, because it was set up by the Tory government. He said, "Over the last 13 years, the public and the markets have completely lost confidence in government economic forecasts. The last government's forecast for growth in the economy over the past 10 years have, on average, been out by £13 billion. Their forecasts of the budget deficit three years ahead have on average been out by £40 billion. Unsurprisingly, these forecasting errors have almost always been in the wrong direction.

The conclusion is clear. We need long-lasting change in the way we put together budgets in this country. The final decision on the forecast has always been made by the Chancellor, not independent officials. And that is precisely the problem. Again and again, the temptation to fiddle the figures, to nudge up a growth forecast here or reduce a borrowing number there to make the numbers add up has proved too great...We need to fix the budget to fit the figures and not fix the figures to fit the budget. To do this, I am today establishing a new independent Office for Budget Responsibility. For the first time, we will have a truly independent assessment of the state of the nation's finances."

That was the scenario that prompted the setting up of the OBR. That scenario is not present in Singapore, and for that, we have very good civil servants and agencies to thank, who keep us straight, who keep us narrow, who keep us honest.

And he asked whether a second opinion is valued. Well, I have explained firstly why it is not necessary. But I also want to go on to point out that in the UK, after setting up the OBR, it has not necessarily been the case that they have been on target. So, the second opinion, well, in 2012, the OBR admitted it had a poor forecasting record. The OBR had predicted economic growth six times stronger than the latest official figures suggested.

And in August 2020, the Institute for Fiscal Studies or the IFS described the OBR's "upside scenario" economic forecasts for UK GDP as "extraordinarily optimistic". So, second opinion does not always settle the issue.

9.00 pm

With regard to the second clarification, the learned Member said that the council he is proposing will serve the full Parliament. The suggestion really is that, okay, this is going to be for everybody. And he asked whether in the absence of such a fiscal council, all suggestions will be treated with the same regard.

Well, the Parliament comprises the Members of Parliament who form the Government, the Members of Parliament who are part of the Ruling Party's backbenchers and the Opposition Members of Parliament. Insofar as proposals are put forward by the Government, these are assessed by the Civil Service. The Government has an idea of the costing of its proposals and how it should be dealt with.

So, in essence, what the learned Member is actually asking is for this council to serve the Opposition Members because the PAP Members are not asking for this, and the Government does not need it. So, effectively, it is a request for a $20 million fiscal council to assist the Opposition Members with their proposals. Effectively, that is what it is.

The Chairman: Mr Leon Perera.

Mr Leon Perera: Thank you, Mr Chairman. Just two clarifications for Minister Lawrence Wong. I thank the Minister for responding in detail to my MOF cuts.

The first one is on the National Research Foundation. I think the Minister referred to some of the downstream outcomes. For example, four of the top 10 blockbuster drugs in the world are manufactured in Singapore. I believe those four are by MNCs though. So, my question would be, really, in terms of local companies, locally owned companies, does the NRF actually track the IP that its spending has resulted in, the IP that is co-created with local companies, and does it track whether that IP then is used to create a blockbuster drug or a blockbuster product by the local company itself further downstream? Is that something that the NRF looks at?

I accept, of course, that there are different uses for research, not just one. But is that dimension kind of being tracked or will it be tracked, going forward? I know that these results take time to manifest. I believe NRF was set up in 2002 or 2003, so it has been 17 or 18 years. So, I am wondering if that is being tracked, examples of that.

Secondly, in relation assessing performance of Temasek and GIC, the Minister helpfully shared about advisory councils that help to guide Temasek and GIC. So, my question is, really, that the Government in the form of MOF is the sole shareholder, basically, of GIC and Temasek, and as the sole shareholder, is there a process within the MOF where you assess whether their performance is good enough?

In past debates on this subject, I believe that the Government has said its approach is a bit hands-off; it leaves it to the Board and management. But I am wondering whether there is a formal process every year or every few years to assess whether the Board and management have done well or whether they have done not well enough, so that they need to be taken to task or, in extremis, whether they need to be replaced. Does that sort of happen within MOF or somewhere else in the Government?

Mr Lawrence Wong: Mr Chairman, let me take the two questions from Mr Perera.

On the first question, the translation from research to economic output, and whether or not local companies themselves are benefiting from this, this is indeed something we do track. It takes longer, understandably, because the capabilities of our local firms may not be at the same level as MNCs. So, their readiness to take research and to translate research into tangible outcomes may not quite be there. So, there is an on-going effort to transform industries to boost the capabilities of our local firms. That is one prong.

But a second prong of this is through NRF's research initiatives itself, some of these get translated into local start-ups, and then these start-ups, in the nature of start-ups, not every one will succeed. Some may exit early but we certainly hope some of them, over time, will grow and be very successful companies. And because we are still relatively early in this journey, I think we do need patience.

Just to give an example of a successful start-up like that which came from research in one of our universities. Members would have read about Nanofilm that was listed recently. This was a project that started from a R&D project in NTU, I think, in 1999; that long ago. And only recently, it got listed.

That is the kind of gestation periods that we are talking about. We are tracking this; we are certainly wanting more translational outcomes that will benefit our economy and local firms. But I ask for patience from everyone, even as we track this effort on a continuing basis and strive for better outcomes.

Second, on evaluation performance of both Temasek and GIC, the Government continually reviews the performances of these two entities. There is a whole range of processes that we have put in place to do this.

First of all, oversight by the Boards which they ought to do as part of their fiduciary duties. The Boards take this very seriously. Both entities have advisory panels, as I have highlighted, and that also provides guidance and oversight. MOF itself has a review process where we meet the Board and management of Temasek on a regular basis. We get them to update us on their understanding of the overall scenario, the risks, the outlook and opportunities they can envisage over the horizon, and what kinds of investment strategies they have in mind.

And then on top of all that, at the end of the day, it all comes down to the returns, and based on the risks that they are taking, the returns that they are delivering. As I have highlighted, we look at these returns not just on a yearly basis. I think that would be very short-sighted and that would be detrimental and counter-productive. We look at it on an overall basis and over a longer term. It is really rolling returns over a longer period of time, preferably over 20 years, which we do, but then we have intermediate milestones and we look at 10 and five-year periods as well. That is the ultimate test. That they are able to deliver consistently good returns over the longer term.

The Chairman: Mr Liang Eng Hwa, do you wish to withdraw your amendment?

Mr Liang Eng Hwa: Thank you, Sir. In the last 12 months, we have quite a series of Budgets. And I am sure behind each of these extensive series of well-structured and thoughtful Budget measures, there were a lot of hard work put in by the officers, the brain-crunching, the deliberations.

Sir, I want to thank the MOF team for the great work and tenacity, I am sure the long hours as well, over Chinese New Year, over Valentine's Day. I think no amount of Auntie Mei Jok's porridge can make up for it.

I want to also thank Minister Lawrence Wong and Minister Indranee for responding to our cuts; and, finally, to the Deputy Prime Minister, really thank him for the solid and steady steer of the Government's fiscal response during these very difficult circumstances, challenging circumstances we are in, and getting us into the safe zone.

I certainly share the Deputy Prime Minister's wish and hope that this FY will be a one-Budget FY, and that we will soon get back to a balanced Budget in the next few years. With that, Sir, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

The sum of $3,869,833,800 for Head M ordered to stand part of the Main Estimates.

The sum of $139,715,100 for Head M ordered to stand part of the Development Estimates.