Use of Past Reserves since 2002

Mrs Lina Chiam asked the Deputy Prime Minister and Minister for Finance in light of a 2011 media report that past reserves have been used 27 times for Selective En-bloc Redevelopment Scheme (SERS) projects since 2002, how many times have the past reserves been used for all purposes since 2002.

I thank Mrs Lina Chiam for her question in which she referred to a Straits Times interview with former President S R Nathan in August 2011. The article mentioned that Past Reserves had been used to fund land reclamation projects and land acquisition for the Selective En-Bloc Redevelopment Scheme (SERS) since 2001 and 2002 respectively. She has asked how many times the Past Reserves have been used for all purposes since 2002.

Past Reserves refer to the reserves accumulated during previous terms of Government. There are several ways that Past Reserves are used.

First, the Constitution provides for the Net Investment Returns Contribution (NIRC) spending framework. This enables the Government to tap the investment returns on Past Reserves in a disciplined and sustainable manner. The NIRC benefits Singaporeans substantially each year. It contributes almost $8 billion to the FY2013 Budget.

Second, Past Reserves have been used to fund land-related projects, such as reclamation, the creation of underground space and land acquisition projects like SERS. This is, in essence, a conversion of Past Reserves from one form (financial assets) to another (state land), rather than a drawdown of Past Reserves. The land and space that is created or acquired forms part of our state land holdings and is, hence, protected as Past Reserves. The use of Past Reserves to fund these land-related projects follows principles agreed to between the Government and the President. Further, when such land or space is subsequently sold, the proceeds accrue fully to Past Reserves.

Since 2002, Past Reserves have funded 23 projects that create new land by reclamation from the sea or new usable space underground like the Jurong Rock cavern. The land and space that is created forms part of our land holdings and, hence, part of the Past Reserves.

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Past Reserves have also been used to fund the land acquisition costs of projects like SERS which seek to enhance the value of the existing land. To reiterate, the acquired land forms part of Past Reserves and the land value is enhanced with the more intensive redevelopment. Since 2002, the Past Reserves have funded 32 such projects.

There is a third use of Past Reserves, reserved for exceptional circumstances. With the approval of Parliament and the President, Past Reserves may be drawn down to deal with extraordinary crises. Members would recall that the Government had obtained the President's approval to draw up to S$4.9 billion from Past Reserves to fund the Jobs Credit Scheme and the Special Risk-Sharing Initiative in January 2009, at a critical time in the global economic crisis.

The use of Past Reserves for spending in such exceptional circumstances may result in an actual drawdown of Past Reserves, unlike its use for land projects as I have described. However, Members would also recall that in this recent episode, the Government decided in February 2011 to put back the full amount that it had drawn down from the Past Reserves, after the economy had recovered from the recession.

In conclusion, our Past Reserves form a critical part of our nation's resources. Any usage of Past Reserves is done in a disciplined and sustainable manner. An actual draw on Past Reserves, as was done in 2009, can only be contemplated in extraordinary circumstances and with the approval of Parliament and the President.