That just about describe the status on GST and NIRC by academic Donald Low.
(1) One year ago, Donald Low accused the AVA of being populist for culling chickens in response to complaints.
At that time he wrote:
"The road to populism starts with ignorance and inertia on the part of citizens."
Donald Low understands very well how populism works.
One year later, Donald Low appeals to populism, playing on the ignorance of citizens as he argues for more NIRC in place of a 2% GST hike.
(2) "Why can’t we tap more of the net investment returns to finance increasing needs, instead of resorting to a GST increase?" Donald Low asks.
"After all, what or who are we saving for, considering that future generations of Singaporeans are likely to be better off than the current generation of Singaporeans entering retirement," he continued.
WOW! WHO OR WHAT ARE WE SAVING FOR?
Pity the young Singaporeans. Donald Low thinks they don't need the reserves as much as their parents and grandparents because they are likely to be better off.
Here's an academic who thinks that reserves are for helping people in their retirement.
Does he know that our reserves are our one and only strategic resource?
Of course he does! Donald Low is just PLAYING ON THE IGNORANCE OF CITIZENS.
For all our reserves, we in fact have nothing.
To quote former minister George Yeo.
"We are only a small island. We have no natural endowments. And what 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?"
During the Asian Financial Crisis when currencies came under speculative attacks, the crisis hit Thailand first in 1997 and then spread to many other countries including Malaysia, Indonesia, the Philippines, S Korea, Hong Kong and China and subsequently to Russia and Brazil as well.
Singapore's official foreign reserves (OFR) helped to maintain confidence in the Singapore dollar at that time and defended the currency against speculative attacks.
The global financial meltdown of 2008 shows how crucial financial reserves were to a small nation without natural resources, that is heavily dependent on international trade and finance
The first time the government had to dip into the past reserves was during this crisis.
To shore up confidence in Singapore's financial institutions, the government used $150 billion from our reserves to guarantee all bank deposits from October 2008 till the end of 2010.
The guarantee covered all Singapore dollar and foreign currency deposits of individuals and non-bank customers in banks, finance companies and merchant banks licensed by the Monetary Authority of Singapore (MAS).
Then in January 2009, because of a fast deteriorating global economic environment and facing the prospect of a deep and prolonged recession, the government sought the President's approval to take out S$4.9 billion from past reserves to fund two one-off measures to boost the economy, namely, the Jobs Credit scheme and the Special Risk-Sharing Initiative (SRI).
(3) "There’s nothing scientific about spending just 50 percent of the investment returns. Why not 60 percent, or even 70 percent? We’d still be adding to the principal of the reserves." - Donald Low
If there is nothing scientific about spending just 50%, then there is nothing scientific about 60% or 70%, or for that matter, 80% or 90%.
So why does Donald Low stop at 70%? Why not carry on that argument and ask: "why not 80% or 90%" and just stop short of 100%?
Is Donald Low parroting a popular line often heard on the internet?
Ignorance is not bliss and Donald does not tell you that the principal needs to be hedged against inflation in addition to making sure that it does not stagnate.
Let's do some simple math. If GIC's returns is 6% and half of that is used for budget spending, then there is only 3% left to save and to hedge against inflation. You want to reduce that further?
Think again. Don't be ignorant. .
(4) Donald Low also assumes a rosy picture in perpetuity for GIC and Temasek. In a downturn, in a crisis, in every circumstance, in every market conditions, GIC and Temasek will be generating the billions we need for spending - like a fairy tale.
Guess we shouldn't be hearing - in perpetuity - anyone talking about the 'billion-dollar' losses iby GIC and Temasek, and how our reserves have disappeared. LOL
What does it take to be an academic in the @Lee Kuan Yew School of Public Policy?
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