Debated in Parliament on 3 Oct 2022.
Mr Deputy Speaker, Sir, I beg to move, "That Parliament do now adjourn."
Question proposed.
Mr Deputy Speaker, Sir, the Progress Singapore Party (PSP) has repeatedly stressed the need to rein in public expenditures before we increase taxes like the GST.
Our Budget has been increasing at a fast pace over the last 20 years and it is not only because of increases in healthcare and social welfare spending.
In recent months, two significant outlays of taxpayers' money have reminded us of the urgency of ensuring better oversight of public expenditures. The first one is the $900 million for funding the SPH Media Trust over the next five years and the second is the $1.5 billion to terminate the public-private partnership operating the Sports Hub. This is a total of $2.4 billion of taxpayers' money.
Based on my 30 years of experience in business and financial management, I question the financial reasoning behind these expenditures. The Government and this House must ensure that every tax dollar is properly spent. The Government must respond in full to my queries, or Singaporeans can take it that taxpayers' money has been wasted.
The first significant outlay of taxpayers' money is the Government's provision of up to $900 million to fund the media operations of SPH Media Trust over the next five years.
I believe that the deal to restructure Singapore Press Holdings Ltd (SPH) that the Government has approved, is questionable, because SPH shareholders should have left behind a larger share of SPH's property assets to support the print media business under the SPH Media Trust.
In the past, SPH used the monopoly profit of the print media business to accumulate numerous property assets, such as The Paragon and Clementi Mall. These assets were sold for $3.9 billion after the restructuring. But only $110 million of cash and shares were left behind to fund the loss-making media business and taxpayers will be footing the rest of the bill moving forward.
It makes no business sense for the Government to have agreed to this proposal. Since the property assets were accumulated over the years with media profits, it is reasonable to expect that more than $110 million should have been left behind to continue funding the loss-making media operations.
Even then-Chairman of SPH, Dr Lee Boon Yang, said during SPH's Extraordinary General Meeting in 2021 that it is not unreasonable for SPH shareholders to make a contribution to SPH Media Trust to sustain the media business. It would have been a fairer arrangement if SPH shareholders had left behind $900 million to capitalise SPH Media Trust, instead of the Government footing this bill using taxpayers' money. The shareholders of SPH would still have $3 billion of property assets to distribute after that.
When the Government announced the establishment of SPH Media Trust, then-Minister for Communications and Information, Mr Iswaran did not mention the potential cost to the taxpayer. When I questioned the new Minister, Mrs Josephine Teo during the Committee of Supply 2022, she replied that there might be no deal if the Government had insisted that SPH bore the $900 million bill.
But as stated in the reply to my Parliamentary Question on 4 April 2022, the Ministry actually holds the power to withhold in-principle regulatory approval for the SPH's restructuring. The Government should not have agreed to SPH's proposal unless more assets were left behind to fund the media business. So, now, the Government should explain why it chose not to do so to this House and Singaporeans.
The second significant expense incurred by taxpayers is the $1.5 billion contract termination cost to be paid to Sports Hub Pte Ltd (SHPL), which is said to comprise $300 million for the open market value of the Sports Hub and $1.2 billion for taking over the outstanding loans taken up by SHPL for the construction of the Sports Hub.
I support the Government's takeover of the Sports Hub and I am fully aware of the developmental and financial benefits. However, I believe that the Government has been overly generous in estimating the "fair open market value" and the remaining financial liabilities of the Sports Hub. If this is so, it will unfairly benefit SHPL which is a private consortium at the expense of taxpayers.
Firstly, I believe that the Government should not be compensating SHPL for the market value of the Sports Hub, if this market value is based on the Sports Hub's name value. The name value has primarily come from the Sports Hub being a national icon, carrying the branding of the "National Stadium" and occupying the site of many of our national memories, like the Kallang Roar.
When SHPL constructed the Sports Hub, it did not pay the Government for the value of the "National Stadium" brand. Therefore, there is no need for the Government to compensate SHPL for this name value now. As SHPL has failed to transform the Sports Hub into a leading venue for local and international events, it is also not justifiable to say SHPL has increased the value of the Sports Hub since its completion.
Second, I believe that the cost of the $1.2 billion outstanding financial liabilities disclosed by the Government was too high.
In 2010, then-Minister for Community Development, Youth and Sports Dr Vivian Balakrishnan told Parliament that financing for the Sports Hub was being raised via a funding competition among the banks, so I would expect the construction loan for Sports Hub to carry a very competitive interest rate. However, Minister Edwin Tong shared recently, in response to mine and Ms Hazel Poa's queries, that 65% of the Government's annual fee payments to SHPL goes towards debt servicing.
As the annual fee is $193.7 million, the debt repayment works out to about $125 million per year according to the Minister. If we assume that the construction cost of $1.33 billion was fully financed and debt repayment is constant over 22 years from 2014 to 2035, the $125 million debt repayment implies a loan interest rate of more than 8% a year, which is way too high based on the market conditions in 2010.
In contrast, a 4% interest is more in line with the market conditions in 2010. At 4%, I estimated that the annual financing payments should only be about $90 million a year from 2014 to 2035. This is much lower than the $125 million quoted by the Minister.
After nine years of repayments from 2014 to 2022, the outstanding loan principal should have reduced to about $920 million by end 2022. This is also much lower than the $1.2 billion quoted by the Minister which the Government is prepared to pay SHPL.
In addition, if the debt servicing is indeed $90 million a year, then SHPL may have accumulated surpluses or reserves from the annual fee payments in the past nine years of operations.
As Minister Edwin Tong has also shared, operating cost is $68 million per year for the Sports Hub. In that case, SHPL should have accumulated reserves of about $36 million per year, which is derived from subtracting the debt servicing and operating costs from the annual fee.
Thus, the total accumulated reserves after nine years accumulated by SHPL should be about $320 million. The new holding company set up by Sport Singapore to own and manage the Sports Hub should take over this $320 million from SHPL.
To sum up, I have estimated an outstanding loan of $920 million and total accumulated reserves of $320 million. Hence, the Government should only be paying the difference between the two amounts, which is $600 million, as outstanding financial liabilities to SHPL.
This $600 million figure is definitely much lower than the $1.2 billion agreed by the Government to pay SHPL. Hence, I would like to seek clarifications from the Minister to justify the $1.5 billion termination cost to be paid to SHPL.
(a) What actually is the detailed debt repayment schedule since 2014 of SHPL?
(b) What is the loan's interest rate and the outstanding loan amount as of today?
(c) Has SHPL accumulated reserves from the annual fee payments that should be taken over by the new Sports Hub holding company?
(d) What is the justification for paying SHPL a market value of $300 million for the Sports Hub?
Finally, if the Government needs to pay more than what the financial analysis allows because it is contractually committed to honour such a generous financial deal for SHPL, would Minister Vivian Balakrishnan, the Minister who signed the original contract, come forward and explain why this was necessary?
Mr Deputy Speaker, I am worried that the Government's behaviour in commercial deals can potentially lead to a waste of taxpayers' money. SPH Media Trust and Sports Hub are good examples of this. Together, they cost taxpayers $2.4 billion.
This may be small relative to the national reserves and the $130 billion annual revenues at the disposal of the Government. But $2.4 billion can go a long way in helping Singaporeans who are struggling financially.
For example, it is enough to exempt average Singaporeans from two years of additional 2% GST or to fund 10 years of ComCare cash payouts for the poor Singaporeans. We could also apply the $2.4 billion to help young Singaporeans experiencing great difficulties to buy an HDB flat now or reducing inflation pressure on all Singaporeans earlier.
From a professional point of view, I conclude, I believe the Government should have spent far less than $2.4 billion on these two projects. The Government owes Singaporeans a more detailed explanation and should be proactive in exploring ways of reducing the cost to the taxpayer.
This House can do a lot more to tighten oversight of public expenditures. We must not turn a blind eye to these two expenditures. I urge the Ministers to address my concerns in clarifications to this House. I also hope that this House will refer these two expenditures to the Public Accounts Committee for follow-ups after this Adjournment Motion.
Minister Indranee Rajah.
Mr Deputy Speaker, the thrust of Mr Leong Mun Wai's speech is that the Government is not fiscally prudent and public expenditure is not well managed. He makes various allegations about the Sports Hub and SPH Media Trust in purported support of these allegations. He says that he requires the Government to answer in full.
Sir, these assertions are without basis. The Government has already responded in full many times.
The issues with regard to the Sports Hub and SPH Media Trust were explained in detail in this House. However, so that Members of this House as well as members of the public are not misled by Mr Leong Mun Wai's presentation, let me restate the facts briefly.
On the Sports Hub, Minister Edwin Tong explained in his Ministerial Statement on 1 August 2022 that MCCY decided to terminate the public-private partnership (PPP) agreement as the interests of Singapore and Singaporeans would be better served by the Government taking over the ownership and management of the Sports Hub.
The key consideration was the Government's desire to bring stronger community participation and activities to the Sports Hub and unlock the full potential of the Kallang Alive! precinct.
Minister Edwin Tong has already explained why we chose the PPP approach for this project and how we benefited from it.
In particular, the construction risks were borne by the consortium. We did not have to bear the cost of construction delays, defects, such as roof leaks, issues with the pitch and sound quality. This also freed up our financial resources during the Global Financial Crisis.
Mr Leong Mun Wai claims that the termination sum of $1.5 billion is too high but Minister Edwin Tong had already explained the basis for this figure.
The termination sum is derived based on a formula stipulated in the project agreement. Most of it is made up of the capital expenditure, which the Government would have had to bear if we had opted for the traditional procurement model.
Minister Edwin Tong had also explained that the full cost of termination is comparable to the financial obligation that we would have had to pay under the PPP if we had chosen to continue with it.
In other words, the entire transaction is financially neutrally because we are not paying SHPL more than what we would otherwise have committed to under the PPP model.
Unfortunately, Mr Leong Mun Wai has chosen to ignore these detailed explanations and instead makes a completely baseless and false claim that the termination sum can be lower.
Likewise, for SPH Media Trust (SMT), this was addressed by Minister S Iswaran as to the reasons why it was necessary to do this in his Ministerial Statement on 10 May 2021. Minister Josephine Teo further explained at length in this House on 15 February 2022 and at MCI's Committee of Supply Debate this year the rationale for Government support for SMT's transformation and how doing so would serve the larger public interest and how the Government will ensure accountability.
As explained by them, Government support will allow SMT to make long-term investments in capability development in the areas of technology and talent. This is needed to sustain and develop our local news media and ensure that we have a trusted, credible source of news and information for Singaporeans.
Our local media companies provide citizens with a valuable Singaporean lens to make sense of global events. If they were to wither and fail, we would become reliant on foreign media. That would not be in our national interest.
It is also necessary in order to support our vernacular print media, the Malay, Chinese and Tamil press, which play a crucial role in preserving our mother tongues and cultural inheritance.
Next year, Zaobao will be celebrating its 100th anniversary, Berita Harian, its 66th and Tamil Murasu, its 88th. It would be a great loss if they could not continue.
To be clear, the challenges faced by the media are not unique to Singapore. Media outlets around the world have seen their revenues fall with the rise of digital content platforms and new avenues for free content.
Publications elsewhere have received life support from wealthy financial backers or funds. Billionaires have acquired established newspapers for philanthropic or other motivations. These include the South China Morning Post and the Washington Post.
Other governments, too, are providing funding for news media. The French government spends hundreds of millions of Euros annually to support the press, including prominent papers like Le Monde and Le Figaro. Scandinavian governments have supported their newspapers for decades, both through direct subsidies and tax breaks.
Mr Leong Mun Wai asked why SPH shareholders cannot pay more. But Minister Josephine Teo has already explained that the shareholders voted and agreed to an injection of $80 million in cash and $30 million worth of shares for SMT.
If the restructuring involved an even higher contribution, the shareholders could have walked away, in which event there would be no SMT and, along with that, all the downsides already mentioned.
Mr Leong Mun Wai fails to recognise the realities facing the media industry in the real world and that if we were to do as he suggests, it would leave SPH Media on a trajectory of decline and, eventually, result in a Singapore without a viable English language domestic media and without our Chinese, Malay and Tamil media, which is not in our national interest.
Mr Deputy Speaker, Sir, Mr Leong Mun Wai's allegations about the Government's management of public expenditure and his objections to the Sports Hub and SPH Media Trust transactions are completely without basis. Yet, he has continued to pursue them repeatedly despite it having been explained to him many times.
What he does today is to pull certain figures from public sources and then start to build on them this giant edifice of figures which one has no idea how he arrived at these conclusions. Then, in a giant leap of illogic, he then attempts to link the Sports Hub and the SPH Media Trust matters to a completely unrelated issue, GST and now, also to ComCare.
You have to wonder why he does this.
A charitable view is that Mr Leong Mun Wai genuinely does not understand the expenditure figures or the rationale that has been explained but, as he constantly reminds us and reminded us again today, he has 30 years' experience in business and financial management. So, he should not have any difficulty understanding them.
So, objectively, the rationale and figures are laid out. If he does understand them, then there is only one other conclusion, which is that this can only be a deliberate and cynical attempt to stoke anxiety and disquiet, confuse Singaporeans and damage the Government.
I ask Members of this House and Singaporeans not to be taken in but to reject these bogus allegations and to support the Government. Then, we can continue to sustain good governance and sound policies for the benefit of all Singaporeans, especially to take care of our elderly and to support the disadvantaged and vulnerable members of our society.
Mr Deputy Speaker, Mr Leong Mun Wai's entire motion is an attempt to portray the Government as profligate and heedless of our expenses. Nothing could be further from the truth.
In persisting with these insinuations, Mr Leong Mun Wai is doing a disservice to Singapore, to our Government and to our public servants charged with the sacred responsibility of looking after the public purse.
Since the People's Action Party (PAP) Government was first elected 60 years ago, we have made financial probity, honesty, prudence, incorruptibility and transparency our watchwords. We have put in place structures to check ourselves strictly and repeatedly. We have carefully built up our reserves and resources for the benefit of our people.
We have just steered our people and our country safely through the most devastating pandemic of our generation. Unlike other governments, we did this without having to borrow.
This was not serendipitous and it was not by chance. We were able to do so only because we have been consistently careful and prudent with public funds and this is so, despite repeated calls by the Opposition, Mr Leong Mun Wai included, to save less and spend more, use more of the reserves, draw more than 50% of the Net Investment Returns Contribution (NIRC). It is this side of the House that has repeatedly said no to all these suggestions of wanton profligacy.
For our part, the PAP Government will continue to exercise prudence in our public expenditure and act, as always, in the interest of Singaporeans and Singapore. [Applause.]
We are at the 28th minute of a 30-minute hard cut, according to the Standing Orders 2(8)(b), so you are allowed, Mr Leong, a clarification, but this Parliament will adjourn, according to the Standing Orders, within about two minutes. So, please make your clarification short and allow the Minister a response.
Thank you, Deputy Speaker. Two questions. One, so the Minister agrees, or is of the view that by allowing SPH to take away $3.9 billion and leaving behind a burden of $900 million for Singapore taxpayers, is agreeable by the Government? The Government accepts that?
Secondly, I have offered a lot of information, in her words, "an edifice of information". The way she put it is that this information is totally useless, it does not help the explanation of the situation. But what I can say is that – the second question – if the Government did not bother to answer the questions I raised, can the Government allege that the information is not useful and so all my allegations are without basis?
Minister Indranee Rajah.
With respect to the first question, or clarification, the answer is no. I do not agree with what Mr Leong says. What Mr Leong fails to understand is that the support put in by the Government for SPH Media Trust is because there are certain things that we hold dear. One, it is to have a media that can see things through a Singaporean lens and that can report things from a domestic viewpoint. That is very important to us. The second thing is to preserve our vernacular media. That means something. That has value. That is worth supporting. And that is why we are willing to put that money forward to support it – for that purpose and in pursuit of those values.
With respect to the second thing, Mr Leong's consistent approach – every time the Government responds and explains a set of figures, he will ask a question; we will set out the explanation and that explanation reflects the reasons why these figures are the way they are and what the figures are. Mr Leong will then say, "Oh, but what about this? How about if we change that? How about let us say we have another Scenario A? How about Scenario B? How about Scenario B and a half? How about Scenario C?" And every time, the Government, is required, according to Mr Leong, to respond to all of these which have no bearing to the figures of the original transaction. That is not something which is a useful use of the Government's time to do.
Order. The time allowed for the proceedings has now expired. I adjourn the House pursuant to the Standing Order. Order, order.
The Question having been proposed at 5.02 pm and the Debate having continued for half an hour, Mr Deputy Speaker adjourned the House without question put, pursuant to the Standing Order.
Adjourned accordingly at 5.32 pm.
PAPERCUTS