a fair balance between the claims of the present and future generations, as
‘something we can pass on to our children’.
(^70) A 2008 amendment (^71) created a
different computation of NII, although the 50 per cent savings rule still applies.
However, as certain components were carved out of the method of computing
past reserves, this 50 per cent savings rule probably applies to a smaller reserves
nest, consonant with the government’s plan to increase spending to finance
various programmes.
Under Article 142 , the finance minister must present an annual proposal for
the long-term real rates of return (LTRRR) expected to be earned on the
‘respective components’ of the ‘relevant assets’, and obtain presidential concurrence.
Thereafter, he must certify the spending limit to the president for that financial year,
an amount not more than 50 per cent of the total of all amounts taken into the
budget. Past reserves ‘shall exclude those reserves equal to the amount so certified’.^72
Incorporating complex financial terms like LTRRR
73
as a method of calculating
investment returns into the Constitution is not easy for the layman to grasp and is
beyond the competence of a constitutional lawyer. Presidential oversight is impli-
cated in the operationalisation of the LTRRR as applied to the net investment
returns (NIRs) as this becomes the formula by which to calculate how much is to
be saved. The government determines the NIR every year for spending involving
both ‘professional expertise on the part of our investment agencies and sound
judgment’, 50 per cent of which goes to past reserves, of which the president is
custodian. There are concerns as to whether the president, with the assistance of
the Council of Presidential Advisors (CPA), would have sufficient public financial
expertise to make these complex evaluations. Provided with the necessary infor-
mation, the idea is that the president would be able to form a ‘well-reasoned
assessment’ with the aid of CPA members, composed of highly competent profes-
sionals who were familiar with markets and ‘know how to assess an argument’.^74
The approach of having internal checks amongst the experts and government
bodies was preferred over submitting the evaluation of proposed rates to parliament;
that is, a ‘fully transparent’ approach. The chosen process is insulated from ‘political
pressures or mood of the day’. Instead, reliance was placed on having ‘the right people
in charge’, on having robust checks and balances ‘within the system’. The finance
minister considered that this imperfect model faced less danger of falling prey to an
overspending bias, by focusing on professional rather than political judgement.
75
Should the president not concur with the finance minister’s LTRRR proposal, a
dispute resolution mechanism is to be implemented and articulated in a White
(^70) PM Lee Hsien Loong, 82 SPR 13 Nov 2006 , cols. 745 – 8. (^71) Amendment Act 27 of 2008.
(^72) Art. 142 ( 1 A)(b). (^73) Art. 142 ( 1 A).
(^74) Finance Minister Tharman Shanmugaratnam, 85 SPR 20 October 2008 , Second Reading,
Constitution of the Republic of Singapore (Amendment) Bill cols. 369 ff.
(^75) Ibid.