SINGAPORE, July 9 — The Government’s coffers will not be affected should the Kuala Lumpur-Singapore High Speed Rail (HSR) project be terminated, said Second Minister for Finance Lawrence Wong on Monday (July 9).
Mr Wong was responding to Workers’ Party (WP) Members of Parliament who had questioned whether there will be financial repercussions on the Republic, specifically on the decision to raise Goods and Services Tax (GST) rate sometime between 2021 and 2025, and the net investment returns contribution (NIRC) from the reserves.
Speaking in Parliament, Mr Wong reiterated that the GST returns were “never meant” to finance infrastructure investments. Singapore’s approach to financing lumpy investments infrastructure include saving ahead and setting aside funding through initiatives such as the Changi Air Development Fund and the Rail Infrastructure Fund, he added.
Such financing will also be done through borrowing by statutory boards and government-owned companies, he added. This will apply to projects such as the Changi Airport Terminal 5, the high-speed rail (HSR) project and the Johor Bahru-Singapore Rapid Transit System (RTS) Link.
WP chief Pritam Singh, who is an MP for Aljunied GRC, had asked about the implications on the Government’s decision to raise the GST should the HSR project be cancelled, as well as the estimated total expenditure for the project.
WP Non-Constituency MP Daniel Goh wanted to find out about the “short-term and longer-term impact” of the suspension of the HSR project on Government revenues and expenditures.
Mr Singh and Assoc Prof Goh also asked about the expected cost of the HSR project to be borne by Singaporean taxpayers.
At the Budget this year, the government announced that it plans to raise the GST rate from the current 7 per cent to 9 per cent sometime between 2021 and 2025.
On Monday, Mr Wong pointed out that Mr Singh had “tried to link the prospect of the HSR project being cancelled to the Government announcement to raise GST”. However, these are “two separate matters”, he stressed.
Mr Wong noted that the decision to raise GST was made to cope with rising government expenditures covering areas including healthcare, security and social spending.
Increasing the GST rate is the “responsible way to ensure that every generation pays for its own spending in a sustainable manner”, he reiterated.
“Therefore, the underlying rationale for the GST rate increase is not affected by the outcome of the HSR project,” said Mr Wong. “Our population will continue to age. More Singaporeans will need support to care for their loved ones. Ultimately, the government will require more recurrent sources of revenue to support these needs.”
When Mr Singh asked whether the termination of the HSR project might lead to the lowering of the NIRC to the Government’s coffers, Mr Wong again said there is “no relationship” between the two. “The NIRC is a separate matter. It’s the largest source of revenue for funding of our overall budget, and so that will be seen in context of funding of overall budgetary needs,” said Mr Wong.
Mr Wong did not reveal the expected cost of the HSR project, saying that it is not the Government’s practice to do so until tender processes are over, as the information could affect the pricing strategy of bidders. — TODAY
