I’ve made the changes.

Thanks.. :)

Regards,
theonlinecitizen

It should be MM Lee.

Mr Steve Chia made similar observation of “‘Under-reporting’ of government revenue” in his 2006 Budget speech:

Given that only 50% of Net Investment Income (as required by constitution) amounting to S$3.7 billion cannot be touched and must go into the national reserves, the government will still expect to have an operating surplus of S$5.1 billion. This S$5.1 billion comprises S$4.1 billion of capital receipts (mainly from land sales and other capital receipts) and an additional S$1 billion of investment income, allowed but also not reflected in this budget. Apparently, the government decides to use only 33% of projected NII returns for this term of government. Why did it not use up all the 50% allowed – to show a smaller budget deficit of $1.86 billion is something beyond my understanding! Can the Prime Minister explain?

http://www.nsp.sg/speech_transcript.php?more=29

As we can see from the following reply, state land is part of the reserved and the capital receipts from the sale of state land is locked up and cannot be drawn without permission from the president:

Dr John Chen Seow Phun (Hong Kah): Mr Deputy Speaker, Sir, Mr Steve Chia earlier accused the Government for concealing the truth by not including in the Budget proceeds from Government land sales, thereby showing a deficit budget. I think either Mr Chia does not understand what constitutes reserves and the protection of it, or he is, indeed, deceiving the people himself. Proceeds from Government land sales obviously is part of reserves, otherwise a rogue government, with the election promise to give away money, can come in easily and start to sell land and give the money to the people. That is why we have the Presidential Election Act to protect the reserves, and land sales is part of the reserves.

PARLIAMENTARY DEBATES – Tuesday, 28th February, 2006

The changes to the net investment income (NII) seems to be addressing the two points raised by Mr Chia. Allowing the government to use up 100% of Net Investment Income is a rational move. However, the move to include realised capital gains is something we need to watch carefully. We need a transparent mechanism to monitor and track the realised capital gains. Otherwise a rogue government, can have a GLC set the value of a piece of asset $X above its actual market value and have another GLC buys it at the overvalued price. The government will then receive $X as realised capital gains. Worse, since the GLC is paying the asset with government reserves entrusted to it, it means the rogue government is drawing on the reserves and bypassing the constitutional protections.