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Pro-PAP Loony Fringe criticises PAP without knowing it

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In (LINK) the writer made a comment that the $8b Pioneer Generation Package was more than paid by the Net Investment Returns Contribution in a single year and future NIRC can be used for social spending. Of course, that attracted the attention of the Pro-PAP loony fringe. But first, here is a constructive response which deserves a look-in to dispel some misconceptions.


Let’s not forget that the $8bil will also earn some dividends or return thro’ the 20-year period. Now where does that return go to?. Tharman is not telling nor has he told us. I have also not read of any MP asking that question.

For me, it’s all very fishy. Over a 20-year period, it’s like spending an average of 5% per year. Now that 5% can be met or paid out from just the dividend/returns alone WITHOUT even having to touch the principal amount. If so, what happen to the principal sum AFTER the 20-year is done?

Chris, can you enlighten us on that or am I mistaken here somewhere?”

Mr. Tharman not smoking for a change?

Given the half truths and obfuscation spewed by the PAP, it is certainly understandable that any reasonable person may smell a fish.  But here’s Mr. Tharman when he presented the PGP in the 2014 budget speech.

“We will create a Pioneer Generation Fund for the purpose and set aside $8 billion into the Fund. The $8 billion, with accumulated interest over time, will be enough to pay for the full projected cost of the package, including a buffer for inflation.”

In the 2014 budget expenditures, $260m was already earmarked for PGP spending for that year. But since the PGP kicks in mid way through the financial year, the full year allocation would have been $520m per year. That implies the Government projected a 2.5% reinvestment rate on the yet-to-be disbursed amounts over 20 years. Total disbursements should be $10.4b.

Mr Tharman was not smoking for a change. But he did not mention the full projected cost or if a higher reinvestment return will increase the total disbursements. Given that annoying habit of under-spending budget allocations, it cannot be certain if large residual amounts in the PG Fund is going back into the SG reserves. Mind you, the Government does not report such items including land sales revenue and excess returns from investing CPF monies into the budget, which account for the large difference to that reported by the IMF / World Bank.

Loony fringe don’t understand what they support

Since citizens are already paying high taxes (they are just not called taxes), why should taxes be increased as the Pro-PAP are quick to shout when social spending can be paid by the NIRC? There is also the trade-off between butter or guns. A reduction in defence spending by 0.5% of GDP releases $1.9b for social spending and still leaves Singapore with one of the highest defence spending. The real question ought to be whether the spending out of the NIRC is sustainable. Here are the reasons it is:

–          The NIRC only takes 50% of Temasek’s Net Income which means the other 50% is available for reinvestment in Temasek’s portfolio, thus growing the reserves.

–          The NIRC only takes 50% of the expected long term real returns of GIC and MAS which means not only the remaining 50% of the expected real returns, but also the difference between real and actual returns is available for reinvestment, again growing the reserves.

–          The government’s operating surpluses adds to the reserves

–          The increased social spending may not even take up the full NIRC, adding to the reserves

–          Land sales adds to the reserves and the 99 year public and private leases and the new 30 year SA leases provide a recurring stream of revenues going into the reserves.

Social spending is not simply devouring funds. The recipients spend it or save to spend later, adding to consumption expenditure which drives the GDP. But here comes the attack of the loony fringe:

“Toyota Car:

Are you saying govt must spend until no budget surplus left? Govt surplus is saving for rainy days! If all surplus spent on welfare then we got no spare cash when emergency came! Last world finance crisis is a good eg, our govt has to use reserve surplus for guaranteed our banks is safe! If govt had spent all reserve surplus on welfare, today all our banks will already wiped off by last world finance crisis! “


The interest and dividend yield of a portfolio normally is barely enough to cover inflation. Hence if we would to spend the returns from interest and dividend the portfolio will be discounted in the long run if we do not accumulate the interest and dividend .

(posters’ insults deleted)”

Both are typical of the pro-PAP comments seen social media.

Beside the financial illiteracy, the comments show the MSM is ever helpful in keeping Singaporeans ignorant. The guarantees @ Toyota referred during the GFC were just that. Unreported by the MSM, in the typical “give with one hand, take back with the other”, the MAS imposed punitive reserves requirements in exchange for guarantees, making the likelihood of drawing down the reserves remote. No reserves had actually been spent to prop up the banks.

And this is why the Pro-PAP loony fringe is the best advertisement for the Change We Must cause. They are denigrating the spending of the returns without knowing they are in fact denigrating PAP policies. For the PAP has repeatedly stated in Parliament that they are already spending the returns from the reserves via the NIRC framework. The Pro-PAP do not even understand PAP policies they were supporting and so effectively brainwashed that ironically they end up criticizing the PAP inadvertently. Certainly, the PAP doubletalk and the ever helpful MSM have also ironically created the conditions to go loony.

Chris K


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