What's the difference between the Government's approach to using land sale proceeds and the WP's proposal?

Someone asks: what's the difference between the Government's approach to using land sale proceeds and the WP's proposal?

If you spend from your wealth, you will deplete your wealth. This is easy to understand.

Hence you need to create new wealth (new income) before you spend so that you do not deplete your wealth.

When you sell an asset (land) you are not creating new wealth. You are just converting a physical asset into a financial asset.

The asset goes to someone else and you get the money.

If you spend the money, then both the asset and the money is gone.

You now have fewer assets to invest and generate income. This means your power to generate new wealth is reduced.

Your remaining assets will generate a smaller new income.

If you keep selling your assets, very soon you will have little to generate new income or wealth.

What is just described is what the WP's proposal will do.

The PAP Government's approach is to put land sale proceeds together with Past Reserves and reinvest them.

The land goes to someone else. The financial proceeds remain and are reinvested. This creates new wealth.

50% of the (new wealth) investment returns under the NIR Framework are then used as government revenue for spending.

In this way, land sale proceeds are being used to generate a continual stream of income for sustainable spending.

The man who works hard to accumulate wealth knows that wealth creation is not easy. He looks at the wealth he has and ask: how can I use this wealth to generate a continual stream of income for sustainable spending?

The impatient man who comes into an inheritance, looks at the wealth and says: wow, I'm so rich. I can now relax and enjoy.