company or other statutory body – on stipulated dates. That is, the transfer will
not be regarded as a draw on past reserves and this truncates presidential
oversight.
The 2004 amendment bill allows transfer of reserves from the government to
statutory bodies (e.g. the Housing and Development Board) or government com-
panies (e.g. Temasek Holdings); this capital injection could potentially fuel
the latter’s aggressive investment strategies;^64 it was not debated at second reading.
The rationale was that this more comprehensive framework for transfer of
reserves between protected entities would ‘enable more timely responses by the
Government to changing economic or business conditions’.^65 Reserves could be
transferred speedily from the government to SBGCs ‘to seize opportunities in new
areas of growth’, or SBGCs ‘may need to be restructured, merged or corporatised
to better deliver public services and manage Government assets’. Government MPs
in media interviews stated that this amendment did not compromise the need for
checks, even if presidential oversight was removed from these transfers. The reason
was that the internal controls of SBGCs remained intact; also, it was urged that
‘we should have an implicit trust and confidence in how the Government manages
our reserves’, as it did not serve the national interest to have ‘the specific allocation
of the reserves subject to public scrutiny’.
66
The second amendments relate to complex financial terms necessary to identify
what a ‘past reserve’ is, without which it would be difficult for the president to
discharge his functions effectively. A 2001 amendment defined ‘net investment
income’ (NII),
(^67) relating to how the NII derived from past government reserves
during the government’s current term of office in a financial year may be spent.
Article 142 ( 2 )(b) provides that, within a financial year, 50 per cent of NII from past
reserves may be spent to fund the government budget, while 50 per cent must
be saved and ‘be deemed to form part of the past reserves of the Government.
This idea reflected the principle that the current government should benefit from
its own work’.^68
This departed from the previous view that NII could be entirely spent as it was
accounted for as part of current reserves.^69 This 50 per cent rule of fiscal
prudence is based on the concept of intergenerational equity, designed to secure
(^64) ‘Reserves and Loophole Fears’,Today, 2 June 2004 , 1. Constitutional expert Kevin Tan
questioned why the income of statutory boards, raised through fees and licences and
charged with fulfilling certain public functions, should be used to help government
companies earn profits.
(^6577) SPR 19 April 2004 , col. 2792.
(^66) ‘Reserves and Loophole Fears’. See Yvonne C.L. Lee, ‘Under lock and key: the evolving
role of the elected president as a fiscal guardian’ ( 2007 ) SJLS 290.
(^67) This complex formula is defined in Art. 142 ( 4 ).
(^68) Richard Hu, finance minister, 72 SPR 12 January 2001 , col. 1303.
(^69) Richard Hu, 70 SPR 17 August 1999 , col. 2025.