EXEMPTED BUSINESS

EXEMPTED BUSINESS:

(Motion): Resolved,

That the debate on the Budget Statement be proceeded with beyond 7.00 pm and the proceedings thereon be exempted at this day's sitting from the provisions of Standing Order No. 91(3). – [Mr Mah Bow Tan].

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ANNUAL BUDGET STATEMENT: Debate resumed.

6.15 pm

Mr Zainudin Nordin (Bishan-Toa Payoh): Mdm Deputy Speaker, thank you for allowing me to participate in the debate on the Budget speech made by the

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Minister for Finance. This Budget has been given many labels such as Transformation Budget, Business Budget, Clearing the House Budget, and many more. Whatever we want to call it, this Budget certainly expresses the clear intent of this Government to change the way we run the economy and the changes that it want to happen in the industries.

Budget 2010 was crafted with a strong sense of realism and the key words that rang aloud in my mind are productivity, innovation and inclusiveness. Nevertheless, Sir, this Budget only marks the beginning of a long journey – a 10-year journey, if I am not mistaken – we all need to undertake individually and as a nation. Let me take this opportunity to highlight three points of concern that I hope to share, namely, the issue of productivity, benefits of growth for all Singaporeans and the issue of low-wage and casual contract workers. Madam, to employers in Singapore, I say the growth and the success of your businesses and companies are crucial. It means more, the continuation of all you have worked hard to achieve for in your hands is the livelihood of thousands of Singaporeans. However, allow me to point out that for us to be a more competitive economy, productivity must be improved. Unfortunately, this is not the case in the last 10 years. It is distressing to see that despite the millions of dollars poured into Singapore's education and the CET infrastructure which translates into millions of dollars to prepare our workers for the industries, workers which are highly skilled, an up-to-date workforce, Singapore's productivity has plateaued and even declined. One can only conclude that it is a result of employers' much-stated preference for foreign workers over locals. Do not get me wrong.

I am of the view that foreign workers are vital to our economy, especially in the sectors where locals are few and hard to

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find, where they bring valuable skills and talent to grow our industries and where they can also transfer their expertise to our locals. But when cheap foreign labour as an immediate panacea to our labour concerns supersedes the upgrading of the skills of our workforce, it becomes a concern. So the question would be: can Singaporean employers afford to simply sit still and depend on cheap foreign labour? The answer would be that we do not have any choice but to go back to basics, that is to improve productivity.

Mdm Deputy Speaker, as much as I agree that the productivity thrust is key and important but, more importantly, the commitment to including all Singaporeans in growth is also vital. We must also avoid the mentality of growth at all costs and be mindful of the income divide and its impact on the social fabric of Singapore. Unequal growth will lead to social unrest and social problems among vulnerable groups who are not able to catch up. To this end, two aspects of the Budget should be applauded, namely, the reiteration of the principle of progressive taxation and the lower middle income group is taxed less than those in the higher income group, and the second is the use of Government transfers such as WIS to ensure more equitable distribution of the fruits of growth.

On top of this, it is of utmost importance that the efforts to unlock productivity are also extended to all groups, in particular, one growing marginalised group needs attention. This is the elderly and, more specifically, the low income elderly. But just as there are many exemplary employers, there have been some who are also unreasonable. These include employers who are only willing to hire people aged between 20 and 30 years for jobs like cashiers, kitchen helpers, clerks and administrators, jobs which older workers have shown time and time again that they can excel at. Sir, my prediction is that today's

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chronically unemployed will be tomorrow's low-income elderly. Already, about 60% of the job seekers registered with the Central Singapore CDC are above 40 years of age and classified as non job-ready due to low educational attainment, unsuitable skills and with personal complications.

The demographic profile of the Central Singapore District is reflective of the projected Singapore profile in 2030. So we know the challenges that face this group will only increase. At the Central Singapore CDC, we have pioneered local schemes such as the Bright Home Programmes to prevent social isolation of the low-income elderly as weak social economic background is strongly correlated to poor social networks and engagements in society. There is a limit to how much such social initiatives can do however. As we know, life expectancy will increase across all our social economic groups and this group will inevitably grow. Madam, the best way to ensure that they remain engaged in society and age in a dignified way is to ensure that they are economically active in some form or another, though not necessary in full-time employment. We thus need more resources to be channelled into bold and creative ways to ensure that there are opportunities for our elderly to be a productive labour resource. An example, at the Central Singapore and the South-East CDC, we have started a silver cooperative where we organise and train elderly from predominantly one- to two-room flats into work groups to undertake activities in their spare time such as quilting, packing of goodie bags and documents scanning. These folks enjoy the opportunities to work as it breaks the monotony of their days and makes them feel valued. I hope that more funds would be channelled into social initiatives such as these, to set in place a framework that can absorb the growing

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elderly labour force in a dignified, effective way in the years to come.

Let me now touch on the vulnerable low-wage casual and contract workers. My experience in the last two years working at the unit for casual and contract workers at NTUC have been enriching and an eye-opener. Let me share with you the characteristics and the profile of low-wage workers, including the contract and casual workers. They are often lowly-educated and the majority of them have lower secondary and below in terms of formal education. For the matured workers, 50 years and above, they usually hold low paying jobs and with less than $1,000 monthly salary. They take up jobs that have low entry requirements, for example, cleaners, packers, despatch riders, hawker assistants, general workers. Unfortunately, they do not have basic statutory benefits and minimum or low medical insurance benefits. For the casual and contract workers, they are unable to enjoy incremental benefits due to short-term contracts, no annual increment, AWS, or bonus. And for family life, they are often married, with school-going children and family commitments like housing loans or elderly parents. They have low level of skill sets and lack English, numeracy and basic proficiency, which is an important requirement for them to acquire new knowledge and skills. We also discover that they do not have or have very low savings.

Now, let me also touch on the challenges that these casual and contract workers face. They have very high inertia to change jobs. They lack confidence to move into new areas despite training. Sometimes even location of a job can be a barrier to them as travelling takes time and additional costs. Very often, you do not see the benefits of training. They tend to be myopic and have a short-term mindset. They find it tough to go for training because of shift work and

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employers are always unable to find manpower to replace them somehow. They are also disadvantaged by the cheap sourcing practice. They lack recreational and social activities and support.

Madam, let me share some of my views on how I believe we can make a difference, a positive change to the lives of these casual and contract workers. We must continuously work hard to cause a mindset change in them and help them to acquire vocational skills that are relevant to the industry. We need to dedicate and focus a series of programmes to help them. This assistance cannot be random or ad hoc . It needs to be a sustained effort from the Government. We need to continuously advocate the importance of re-skilling, up-skilling and multi-skilling so that they can improve their lives and their productivity. We need to ensure that more employers embrace best sourcing and make training part of the company's culture and to peg rewards to performance of their workers. We have seen and heard a lot about some of the sectors that employ many casual and contract workers. What else can we do to improve these sectors? Firstly, we need to professionalise these sectors that have very high number of casual and contract workers. This can be done through proper accreditation and improving the image of these jobs.

For the training programmes, these training programmes need to be targeted for the casual and contract workers and it must be made more flexible. For example, it must be done over the weekends, in small groups, by modules, more tutorial staff for easy learning, create platform for them to learn and practise at the same time. Of course, Madam, we need to also give them some recreational and social support and make it more accessible for them to receive emotional support. To this end, I am very glad that the Government will be introducing the Workfare Training Scheme (WTS) and is also improving the

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WIS to assist the low-wage worker. We need to make these schemes more effective and robust to ensure that we can achieve inclusive growth – real inclusive growth. I am confident, Madam, that we can do more and urge our Government to stay focused on how to assist these workers to overcome their challenges that I have mentioned earlier.

Madam, allow me to say a few words in Malay.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mdm Deputy Speaker, I would like to encourage more workers to continue upgrading their skills and knowledge. Our economy is growing and getting vibrant, and more opportunities will emerge. It is during these times that we must take the opportunity to improve our workers’ conditions to get jobs.

As mentioned by Mr Tharman, the Government will set up more training institutes to help workers upgrade their skills. I am certain that more new training and jobs will be made available. In the future, if there are workers who lost their jobs, they can be given proper guidance and receive counselling on their abilities and strengths, which can be developed in those institutes.

With the advanced CET structure, more workers can be helped to enter developing sectors and industries that need suitable workers and, most importantly, workers who have the required skills.

Mdm Deputy Speaker, the message that I would like to convey is that our workers must open their minds to explore new jobs, and upgrade their lifelong capabilities and skills. They must continue the effort to improve themselves. Do not be shy to ask, and go to Government agencies like the Community Development Councils (CDCs) and also the e2i, if they

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still do not understand what they can do and get the job assistance so that they can help themselves and their families.

( In English ) : Now it is time for us to take a step back and focus on the fundamentals, ie, our mindset, skills and values. Develop true value and real substance that will be able to sustain through thick and thin and not just superficial. I believe this can be done through skills upgrading, innovation and productivity. Though it is not going to be an easy way, we should persevere and avoid the shortcut measures. The Government can lead the way and make the difference. At the same time, Government should also help to lower the cost of doing businesses in Singapore wherever it is possible so that we can continue to grow and develop our economy.

With that, I support the Budget.

*Cols. 2821-2822.

6.30 pm

Dr Teo Ho Pin (Bukit Panjang): Mdm Deputy Speaker, I rise in support of the Budget.

Madam, Singaporeans understand that no one owes us a living and we all have to work hard to make a living. Singaporeans also understand that the global economy is getting more competitive and we need to be creative to find our niches in the future. Thus, we must learn to work hard and work smart to secure our future.

Madam, last year’s budget was aimed at "Keeping jobs, and building for the future", while this year’s Budget focuses on "Creating quality jobs, and securing our future". I fully support the $5.5 billion budget to increase the productivity of our economy and workforce. Singapore’s enterprises and workers must learn to

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work hard and smart. We must produce better quality goods and services to satisfy the rising expectations of our global customers. Although it is important to upgrade the work skills of Singaporeans, provide quality jobs and increase their incomes, we must also strike a healthy work-life balance for our people.

Madam, Singaporeans cannot be mere units of production; we need to have our dreams and aspirations to lead a better life in Singapore. There must be more meaning in life than just earning more money. The Government must provide an environment where Singaporeans will be happy with their work, their families, their friends and their country. Therefore, self-reliance and quality of life should be the key issues to address instead of just productivity and inclusiveness. In this regard, I would like to offer several suggestions for the Finance Minister to consider.

Madam, no one can dispute that higher skills can command higher income and, thus, improve self-reliance and quality of life. But how come not many Singaporeans are rushing to take up skills upgrading courses? There are many barriers to skills upgrading and continuing education of workers, in particular low-wage workers. These include literacy, affordability, accessibility, indifferent employer support and lack of self motivation to upgrade.

From the experience of the Community Development Councils, we found that job seekers generally lack a sense of ownership and drive to upgrade. This could be attributed to the lack of a learning culture among Singaporeans. Many Singaporeans do not prioritise continuing education and training in their lives till too late. Therefore, to encourage Singaporeans to pursue continuing education and training, we need to take a multi-pronged approach. We have to

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incentivise both the employers and employees to trigger the desired skills upgrading and productivity change.

First, there must be self-motivation and incentives for individuals to upgrade themselves. The income tax course fee relief may provide some motivation. But it may not be attractive to the most vulnerable low-wage workers or unemployed. I propose that we set up a CET Endowment Fund for Continuing Education and Training for all Singaporeans. The endowment fund could be funded from the skills development levy and also top-up from our budget surpluses in good years.

The CET endowment fund can facilitate the opening of a CET account similar to Edusave for all adult Singaporeans. This will directly incentivise individuals to take up continuing education and training throughout their working life. It will also ensure more ownership among individuals to continually upgrade their employable skills through courses approved by WDA.

With individual CET account, Singaporeans will have more flexibility to choose the relevant CET courses to enhance their employability skills in a dynamic market condition. To further encourage skills upgrading, the CET account should also grant training allowances and bonus payments for the successful completion of skills competency tests of these approved courses. As I have mentioned before, skills upgrading courses must be properly designed and conducted by credible training institutions. Therefore, independent work skills competency tests should be conducted to ensure that high training standards are maintained.

Second, we should encourage enterprises to take ownership to upgrade the skills of their workers. Madam, I support the Workfare Training Scheme

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which provides incentives for employers to send their employees for training. But I am not sure whether this scheme will be effective in making sure that employees who require training will be sent for training. To ensure that employees will continually attend training, I propose that we provide a training leave entitlement for all workers, especially low-wage workers, in our Employment Act. The Government can, thus, use the Workfare Training Scheme to reimburse absentee payroll accordingly. In this way, both the employers and employees can initiate the training leave, thereby providing more momentum to raise skills levels and productivity.

Madam, in my past Budget debate, I had proposed for the abolition of property tax for owner-occupied residential properties, citing reasons that it was not aligned with our home ownership policy. I am glad the Finance Minister has responded progressively to this call and come with a Progressive Property Tax Regime. Madam, this has indeed benefited many home owners, especially the HDB heartlanders, but I would like to urge the Finance Minister to take bolder steps to revamp our property tax system to encourage both ownership – home ownership and community bonding. Many Singaporeans are home owners but there is still high mobility among Singaporeans in changing their homes. Some have even lost their flats and life savings as a result of early cash out of their nest eggs. The mobility of Singaporeans, as a result of changing homes, has posed serious challenges to social cohesion. The change of neighbours has resulted in the lost of community bonds and also eroded efforts by the community stakeholders to bond our people. This may have adverse consequences on our social fabric if Singaporeans continue to change homes frequently in the future.

Madam, to promote home ownership and community bonding, I would urge the

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Finance Minister to consider abolishing the property tax for all owner-occupied residential housing owned by Singaporeans, irrespective of housing types or annual values. Alternatively, the Government can consider waiving property tax for Singaporeans who stay in their homes for 10 years or more. In this way, we can encourage Singaporeans to purchase residential properties and stay longer in their neighbourhood to build a stronger community.

Madam, as a first-world economy, Singaporeans should enjoy a better quality of life, but have we attained the "Swiss standard of living" yet? Despite having a safe living environment, affordable housing, good education and quality healthcare, we still have thousands of Singaporeans emigrating to other countries yearly. Common reason cited being "Singapore is too stressful and boring". Although, it is crucial to build our economy, the Government should also place more emphasis on the quality of life of Singaporeans. We should be a country and not a company. Every Singaporean should be nurtured to maximise his or her potential to lead a meaningful life in Singapore economically, socially and spiritually. The Government must engage all Singaporeans to find "The Singapore Dream".

Madam, the "Live, Work, Play" environment as provided by our land use planning authority (URA) should be complemented by our Government’s support to achieve a healthy work-life balance for Singaporeans. I would propose that more research and development be conducted in this area to determine how we can achieve an "outstanding quality of life" as mentioned by our Finance Minister. We must set out clear desired outcomes to measure our efforts towards ownership, quality of life and nation building. The Government must carry the

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torch and lead our people to achieve "The Singapore Dream".

6.40 pm

Mr Arthur Fong (West Coast): Mdm Deputy Speaker, this Budget has been called many things from progressive and, in the same breath, mildly uninteresting and lacking the impact for individuals that some were hoping for. Colleagues at work have asked me: where are the goodies? But make no mistake, it is a Budget that we need to support if we are to weather the next phase of our economic development.

This Budget is about jobs, it is about a livelihood, it is about our future and that of our next generation. We have to start addressing that today. It is about sustainable development. No, I am not going to talk about the green environment. I am actually referring to how we can sustain and grow our economic development that we have achieved. How can we grow and stay relevant and plug in with the rest of the world?

Jobs – we have not been thinking about jobs for a long time. What do I mean? We have not been thinking about how we do our jobs. What can we do about our jobs or what can be done with our jobs? Mr Lim Swee Say talked about job redesign and job enrichment and various programmes, and it has largely been very successful but that is a movement that has largely been top-down with partnership from employers. Have individuals thought much about it? Perhaps a few. The constituents and those who come to the MPS would probably not think much of being able to relate to the core of the productivity as well as how immediately it helps them and their families.

How do we inspire to aspire to the objectives of this Budget? How do we create the change or, in Minister

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Tharman's word, "shift" in this workforce? And the change would be to leave enough momentum and occupy mind space for the next generation workforce for the decade.

Madam, as Finance Minister has said, this is a phase shift, a transformational step up the value chain. I am interested to know, aside from all the incentives and the perks given out to private and public actuators to create this productivity lifestyle, how can people be moved into this? For reasons that I have mentioned above, those who say this is a bland Budget, I would say this is a wake-up call.

My concern, Madam, is that the ship is hard to turn not because the seas have become rough but the ease that we have become accustomed to moving with the current has made it tougher. The issues about foreign and local workforce have been debated by speakers before me but I have this to add: in a slew of incentives to employers to increase productivity, there are businesses with jobs that require foreign workers, notwithstanding the increase in foreign worker levy to be phased in. Why? We have been successful in upskilling and raising the education of our people. Kudos to the Government. We have been quite successful in giving people a good way of life, even low-wage workers and no-wage persons have no interest in doing these jobs simply because they think it is beneath them, too tough or other valid reasons. Union Chief, Mr Lim Swee Say, had assured the House that there will be no intention of sending foreign workers home and employers will continue to have these workers, but at a higher cost with the phase in of the increased levies. Will the businesses have other jobs or areas that productivity gains, drawing from the Budget incentives or assistance, to offset the costs that are imminent? If not, I hope these businesses will not shift out or close down altogether. That might leave

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a carnage of SMEs depending on these businesses a tougher time.

Madam, this Budget is not a bland and uninteresting one. It exposes the vulnerabilities that every Singaporean and PR face. How able are we to stoke up, rev up, our workforce to tune in to this productivity work-life is the indication of what kind of life and future we will have in the 10 years and beyond. I call on the Government to work on articulating better the objectives of the Budget and how vulnerable our economy and, hence, our livelihood and to those of our next generation.

Madam, I support the Budget.

6.44 pm

Mr Alvin Yeo (Hong Kah): Mdm Deputy Speaker, I applaud this year's Budget for its bold move – focus on productivity gains in order to grow our maturing economy. It puts in place financial and taxation measures to implement the recommendations of the ESC to take our country through to the next phase of its economic development.

The devil, as always, lies in the details. The higher foreign worker levies, which attracted much of the media's attention, are to be balanced by various productivity initiatives such as the productivity and innovation credit, which is aimed primarily at SMEs, and the $2 billion National Productivity Fund to boost productivity, particularly in industries such as the construction industry. The details on how these credits are to be claimed or how these monies will be used are being released this month and will, no doubt, be closely scrutinised to see how they can yield the benefits that have been promised.

Otherwise, we may simply experience rising costs from companies utilising more local workers who are more scarce and command higher salaries, or from employers passing on the higher levy fee without the corresponding increase in

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output, which would defeat the very strategies they were designed to promote.

I would like to speak on two areas which were not covered in this year's Budget and hope they can be given due consideration by the Minister for Finance, if not in this year's Budget, then perhaps in future Budgets or even off-Budget measures.

The first relates to the tricky question of when to start pulling back the various measures that were introduced in the dark days of the post-Lehman Brothers collapse. Our country is not the only one facing this poser. In the United States, there have been various calls for and against withdrawing their stimulus package, which amounted to hundreds of billions of dollars. Ben Bernanke, the Chairman of the Federal Reserve, has hinted that it needs to be done before too long for fear of igniting inflation. But the current answer seems to be "but not just yet". The earliest now, analysts predict, that some of the measures will start to be withdrawn is the second half of this year. Even in China, which has been the locomotive of recovery, certainly in Asia, the government is moving cautiously. Despite widespread expectation that the injection of liquidity would be cut back as the economy registered 9% growth last year, their leaders have indicated that the time has not come yet to withdraw the various stimulus measures.

This is relevant for Singapore because key features of the resilience package introduced last year were the Jobs Credit Scheme and the Special Risk-Sharing Initiative (SRI). The SRI ensured that banks continued to lend to businesses even in the downturn, while the Jobs Credit Scheme helped reduce the retrenchment of workers by defraying part of the cost of the CPF contribution that employers had to make for them. While

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the SRI will continue for another year, albeit at a reduced level, the Jobs Credit Scheme will come to an end after the middle of this year. I have no issue with the step-down amounts payable under the Jobs Credit Scheme this year, as it is not intended as a permanent feature, and this serves to wean companies of depending on it. However, the road to recovery is still fraught with challenges, as can be seen from the stance of the larger countries and relatively small movements that can still greatly influence our open export driven economy. If something untoward were to happen, do we then rush back to implement another Jobs Credit Scheme? It seems to me to be prudent to keep the Jobs Credit Scheme in place for the whole of 2010 and that, hopefully, the recovery will be on a firmer footing by the end of the year. At the very least, I hope the Minister can review the situation when we come towards the end of the second quarter to see if our companies still need the extra help and if the retrenchment numbers are still under control.

The second issue I would raise is our personal income tax regime or rather the lack of any adjustments to the same. This is not about goodies for individuals or having more handouts in what was anticipated to be an election year Budget. This goes beyond the discrepancy between the flat rate of 17% for companies and the top marginal rate of 20% for individuals, although this discrepancy does lead to some uneven effects between enterprises which would organise themselves as either corporations or partnerships. Rather, the more serious difference lies with our closest competitor in Hong Kong, where individuals are taxed at a flat rate – 15%. Given that ours is a marginal tax rate regime, the individual who is tax resident in Singapore only starts to lose out to his Hong Kong counterpart when his annual income is just under S$500,000. At levels of S$1 million and above, the differences can be

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considerable. It seems insensitive, certainly politically insensitive, to be talking about reducing tax rates for high earners when many people are still struggling to get by. But a large portion of these high earners – and I am talking about foreigner high earners – are talented individuals who are being courted by many countries for what they can bring with them. A finance professional might come to Singapore and start a hedge fund here, which helps to boost our financial sector. A regional director might choose to relocate himself here which would lead to regional establishments coming with him which, in turn, creates more jobs and which, in turn, brings more tax revenue.

These movers and shakers are influenced in their decisions by many factors. These include housing, schools, the environment and crime rate. It is not the only factor by any means but their personal tax rates are usually an important one. It is correct that our tax rates, even for high earners, are lower than most countries in Asia. But our service-oriented finance industry dominated economy is not competing as such with most of them, but mainly with Hong Kong as we jostle for the spot of the pre-eminent financial centre in the Asian time zone. This is one segment of the economy where foreign worker levies play little or no part, and yet it is still key to enhancing productivity in the sense of attracting the right foreign talent to Singapore.

I appreciate that the heavy investments in productivity growth in this year's

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Budget may have made it difficult to fit in any adjustment of personal income tax rates, but I trust the Minister has one eye, or perhaps both, on such a move in the not too distant future.

On that note, I support the Budget.