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21 Feb 2019
Ministry of Finance
Feedback View - 428
Special Purpose Funds

I was surprised to learn that there were 9 special purpose funds created in recent years. A total of $41.2 billion were stashed away in these funds. 
 
  $ billion
Edusave Endowment Fund 6.6
Lifelong Learning Endowment Fund 4.9
Medical Endowment Fund 4.6
Eldercare Fund 2.9
Community Care Endowment Fund 1.9
National Research Fund 2.8
GST Voucher Fund 4.1
Pioneer Generation Fund 7.3
Merdeka Generation Fund 6.1
Total 41.2

These funds were created from the revenue surplus of the government. Instead of stashing away the money into these special purpose funds, the government could have lowered or abolished the Goods & Services Tax, provided more subsidy for health care, child care or education or find other ways to lower the cost of living for the people.

I wish to point out the following risks of using this approach:

a) The money set aside was calculated based on the projected cost of the benefits. This is likely to benefits to remain at the fixed levels and not adjusted according to the changing needs of the people.

b) It is difficult to manage the special purpose funds and to ensure that they funds are not siphoned way through scams. It has already happened with the Skills Future payments which is probably funded from the Lifelong Learning Endowment Fund.

c) These money flows and use of these funds are not subject to scrutiny by Parliament. The lack of scrutiny and transparency is risky.

It may be useful to set up a special purpose fund which is managed in the following manner:

a) The mandate and objectives of the fund is clearly set out.
b) A board of trustees is appointed to manage the fund
c) The board ensure that the fund is used to meet its objectives and keeps up with the changing needs
d) A detailed annual report is present to Parliament and also published for scrutiny of the people.

I do not see these good practices being followed. I hope to see this good practices implemented in the future.

Tan Kin Lian 

Do you agree that these funds should be properly managed by adopting the good practice. Vote (agree, disagree).
 

 


Agree: 15  Disagree: 1  Vote  

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