In January this year, I moved the Constitutional Amendment Bill to require the government to protect at least 50 percent of the Net Investment Income (or NII) earned from past reserves. The issue of whether or not to protect NII was one that the government carefully considered for a long time. Previously, NII used to accrue fully to current reserves and was all spendable.

The composition of operating revenue has since been changed to include a new item called "NII Contribution". This is the portion of NII that is available for the government-of-the-day to spend. NII now also incorporates interest earnings from developmental loans which have been classified under the item "Others". The item "Others" is consequently much smaller.

Government has also reclassified expenditure on land reclamation projects. These are projects which help to build up the nation's land bank for long-term use. They were previously funded as development expenditures using current revenues. This arrangement could be a disincentive for future governments to take on such projects as benefits would only accrue in the long term. While this government has not shrunk from carrying out reclamation projects, we should make changes to address this potential problem and ensure that such projects continue to be undertaken by future governments.

Land reclamation should be viewed as a long-term investment. From FY2001, expenditures on land reclamation will be funded from capital receipts from land sales. Such expenditures are reflected as land-related expenditure in the Budget Book.

In addition to the changes I have outlined above, refinements have also been made to the sectoral classification of ministries. The Ministry of Foreign Affairs has been shifted to the newly renamed Security and External Relations' sector, while Ministry of National Development has been transferred to the Social Development sector. These changes have been made to better reflect the main functions of the two ministries. For the same reason, the sector General Services' has also been renamed Government Administration.