DEBATE ON ANNUAL BUDGET STATEMENT

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ANNUAL BUDGET STATEMENT: Order read for Resumption of Debate on Question [22nd February, 2010],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2010 to 31st March, 2011." – [Minister for Finance].

Question again proposed.

12.31 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Speaker, Sir, thank you for allowing me to speak and to open the Budget debate. I rise in support of the Budget Statement for Financial Year 2010 as presented by Minister Tharman Shanmugaratnam.

Budget 2010 is one of moving Singapore forward in the next decade and

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to transform our economy to ensure that we can continue to achieve sustainable growth. It focuses on driving key recommendations of the Economic Strategies Committee with three important outcomes:

(1) Higher quality of jobs and real wage increase – raising productivity through deeper skills and innovation (both of the individual worker and of the companies).

(2) Growing globally competitive companies – to enable our companies to not only compete globally but, more importantly, capturing new market opportunities and to grow their businesses. Using Singapore as the base while they internationalise to enable growth and sustain high quality of jobs in Singapore. On a positive note, there is a clear emphasis on the various schemes in directing help especially for smaller companies – examples include the Partnership for Capabilities Transformation (PACT); support for business associations to be growth champions; nurturing the next generation of business leaders to enhance SPRING’s Business Leaders Initiative; improving access to Growth Finance such as catalysing growth investments through co-investments to help companies that have achieved initial success and are looking to scale up by matching range of funds with private sector investments in Singapore-based enterprises; and promoting cross-border financing where the Government is studying various models to develop market-based commercially run institutions to support growth of cross-border financing for Singapore based-companies.

(3) Ensuring all Singaporeans are included in the growth – while high quality jobs and ensuring growth for companies operating in Singapore is important, I am glad to note that one of

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the key thrusts of the Budget is inclusive growth for all Singaporeans.

From the various feedback channels including REACH, online blogs and forums, plus several dialogues that I have been involved in over the last week with business groups as well as grassroots leaders, reactions to the Budget have been mixed. While many acknowledge the soundness of the approach and intent of the Budget, several expressed that more may need to be done on the scope, timing and form of the initiatives to be more effective for both individuals and businesses.

Many recognise and agree with the vision to ensure that Singapore stays competitive, to sustain growth in the next decade as our window of opportunity is short with many cities, including those in Asia, developing rapidly and catching up with Singapore.

The initiatives like the Productivity and Innovation Credit (PIC) and the Tax Allowance and stamp duty relief to defray M&A costs as well as the proposed deferment of import Goods and Services Tax (GST) are welcome measures. But as tax reliefs, they do not address the upfront financing constraints that businesses face. Innovation and measures to restructure companies to drive productivity improvements require upfront investments and will have cash flow impact. For smaller companies, this may prove challenging, especially given the backdrop of just coming out of the economic crisis. Perhaps help to these companies for such upfront investments could be addressed by the newly created National Productivity Fund.

This leads me to another point which is on landing the schemes effectively and ensuring that companies that have potential do leverage and have timely access to the schemes. Feedback has been that understanding existing schemes

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and qualifying for them can be time consuming and challenging especially for the smaller companies.

The point that some may have been missed in the Budget Statement is that the existing programmes or schemes do not go away. They will complement the new initiatives in Budget 2010. This, however, does serve to highlight that given the many schemes that already exist and together with the new initiatives of Budget 2010, it can be very complex and difficult for companies, especially the smaller companies with little back-end support, to understand much less apply.

I received feedback for the Government to provide programmes and funding but not to impose too many rules and criteria that may deter companies that have potential from leveraging them. The suggestion is that the principles for qualifying for the schemes should be set but balanced to simplify the implementation.

There was a suggestion to extend the reach of the existing schemes to smaller companies via audit firms to complement existing channels. The rationale is that all companies need to be audited and audit firms could be engaged to advise companies on how to leverage these schemes for better effect and take-up.

How to implement these policies such that companies will be encouraged to upgrade? The key question for all of us is how to ensure that we land the initiatives such that businesses, especially SMEs, can effectively leverage them to innovate and upskill so as to achieve greater productivity.

As mentioned earlier, the various programmes and schemes are welcomed to help companies to innovate and raise productivity. I would, however, maintain that there is still a need for coaching and capability building. While I agree that the

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Government cannot pick winners or determine losers and that it should play an enabling role, there is still a need to develop promising companies with potential. Take the analogy of top talent development in large organisations. Most large organisations have programmes in place to identify top talent early. There are deliberate strategies and programmes to develop these identified talents by providing them opportunities. There are also coaching and mentoring programmes to support these high potential talents. This accelerates their development and provides them the platform to grow. Similarly, promising small enterprises do require more than financing. This is not about giving special privileges to our local SMEs nor hand-holding them. This will help nurture and accelerate their growth and success. For example, take Capital Land and how it helps position viable local companies like Old Chang Kee, Charles and Keith and others in its projects both locally and overseas. It provides promising companies like these a platform to scale and to grow.

I would like to touch on several of the Budget measures that may require further consideration given some feedback I have received from businesses on their potential impact.

The phasing out of Industrial Building Allowance (IBA) and the introduction of the Land Intensification Allowance (LIA) Incentives – while we understand the land constraints faced in Singapore and, hence, the need to optimise land resources and ensure efficient use of industrial land for higher value activities, the immediate phasing out of IBA may have unintended consequences, even with the exceptions allowed as outlined in the Budget Statement.

Business leaders I spoke to shared that the phasing out of IBA will raise the cost of doing business. LIA is more targeted at the nine qualifying sectors and users who

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do not fall within the nine sectors will no longer qualify for the building cost relief and this may lead to increased cost.

It was also shared that physical clustering of industries in one location is not always possible. Industries which are key to growth, eg, port facilities, energy plants, warehousing, telecommunications, have high capital expenses and these are not included.

The phasing out of IBA in the short term may be contrary to promoting the ecosystem of SMEs as part of the cluster. Singapore competes with countries like Hong Kong for inbound investments. Hong Kong currently has both IBA and the Commercial Building Allowance. These are significant for both SMEs and MNCs.

So, as SMEs are also encouraged to innovate and grow, they will need space to grow. This will require investments and will affect decisions to relocate. For example, retail is not part of the nine key industries identified for LIA. Retail requires warehousing and storage and, hence, affects sustainability.

So, the recommendation is that the constraint of limiting LIA to only nine sectors be lifted and to allow for competition and value-add to determine the efficient use of land. It was opinioned that the nine sectors will also evolve and land utilisation and needs may change.

M&A allowance and stamp duty remission – this is welcomed as amalgamations are made simpler to facilitate companies to grow through M&As. There are requests to remove the $5 million cap on the value of the acquisition per annum. Why put a cap on M&As, as Singapore already faces challenges on attracting M&As? M&A is a crucial and under-used approach for Singapore companies to grow both

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domestically and overseas. Tax savings while beneficial will not be the major swing factor. There was also a request to consider extending the qualification of M&As beyond the Companies Act framework to sole proprietorships to extend the benefit.

The Foreign Worker Levy – timing and scope. I think there has been some confusion where this was relating to productivity as well. Although they are related, they are separate issues. If not calibrated, it may also send the wrong signals to companies looking to invest in Singapore or the foreign talents that are in Singapore may feel that Singapore is not as open as it used to be.

From a timing standpoint, although the rise in levy is graduated over three years, there is also concern expressed by some businesses that this may impede the ability of companies to leverage and capture the opportunities of the recovery as their capacity will be impacted. Productivity improvements of local talent will not be immediate and it will take companies some time to innovate and achieve greater productivity. This is further exacerbated by the fact that it is difficult in the short term, at least, to change the mindset of Singaporeans to take up certain jobs in industries like construction, which are seen as strenuous, and some services jobs that require long hours of standing.

Care giving industries, VWOs and the step-down healthcare sector will also be impacted by the increase in the foreign worker levy as they are heavily dependent on foreign talent and certain roles cannot be easily automated. This will impact cost of treatment. The recommendation is to provide credits to offset the impact for these institutions.

The Growth Fund – it is heartening to see that the recommendation that the GPC and others had put forward to the

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Economic Strategies Committee (ESC) on the need for growth or patient capital was recognised and a specific initiative was set up, ie, the $1.5 billion growth capital.

The challenge is in the structure of the programme as fund investors will not be likely to find such investments attractive as they will only deploy the funds if they find viable qualifying companies to support. This may, however, be an incentive to start the fund to access the matching Government funding.

Tax deduction for angel investors – the intent is good and is consistent with the overall objective and is generous. However, expectations need to be managed on how much this scheme will spur investments. Angel investors look for large potential returns against a high downside risk. The tax benefit, while it would be appreciated, would be "spent" without much incremental angel investments.

Continuing Education and Training (CET) – hiring and retaining good talent is a challenge for most SMEs. In the various dialogues that we have had, there have been requests for more flexibility on the training or the courses eligible for tax reliefs and tax incentives, especially for SMEs that do invest in developing their talent.

Definition of productivity – I think this is not clear, at least many have their own interpretations. There needs to be continuous efforts to explain and define productivity. It is useful to also show best practices as well as evidence of productivity impact. To this extent, the Government can take the lead and highlight how it is driving up skilling and innovation as well as improving on productivity.

We continue to make investments to make Singapore an attractive hub for talent and businesses with the world as

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our market. Not only must we attract quality talent and companies to build their career and business in Singapore, we must also ensure that we retain and attract our own local talent and businesses to Singapore.

Our talent base may be small but Singapore talent is sought after by many developing and developed economies. It is not altogether a bad thing to have our local talent in other markets as it does help to develop their capabilities. What is more important for Singapore is to be able to attract these talents to return to Singapore and to use Singapore as their base. To do this, there must be continued quality jobs and opportunities to attract them. The same holds true for local businesses. Singapore must remain an attractive place for them to locate their businesses and use Singapore as a Hub.

Apart from the quality and advanced infrastructure, sound political and social framework and pro-business policies, I believe Singapore must also be able to build ecosystems of excellence in order to attract and, more importantly, retain quality local and foreign talent. This will create the "buzz" and attract talent to want to be in Singapore to create new businesses and innovate.
Singapore should exploit our areas of strength in the various sectors, eg, urban solutions, infrastructure and transport management and system, financial services and healthcare, to build ecosystems of excellence and export capabilities to help our local companies capture opportunities in these areas.

The emphasis should not be on centres of excellence but in developing ecosystems of excellence. The intent is to create new market opportunities while building on our strengths. As we cultivate and build Singapore’s ecosystems of excellence, there will be a need to examine how intellectual property is

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handled for these industries, especially for start-ups and SMEs.

Although there may have been some disappointment for households as there were minimal cash handouts or income tax rebates in this year’s Budget, the Budget does aim to look at supporting low income earners with enhanced WIS as well as the Workfare Training Scheme (WTS). Recognising the needs of the aging population, there are top-ups to CPF Medisave, Medifund and Eldercare fund. Tax relief is also extended to middle income families with the shift to a progressive property tax regime and raising income threshold for taxpayers with elderly or handicapped members and the parent relief and top-ups to Post-Secondary Education Account for families with children.

Singapore has emphasised on meritocracy and this has worked well for us and we have built strong work ethics based on this. While maintaining our meritocratic ethos, we must now learn to work better together, especially as we look to external markets to scale and to grow. We need to be able to help Singaporeans and those who have chosen to make Singapore their home feel that while there is competition for resources, people still feel that they have an equal chance for success and they are not competing with each other for limited resources – whether it is schools, homes, cars. People will achieve different levels of success but nonetheless they succeed.

Let me just use my favourite analogy on running to illustrate the point. When I first started long distance running, my friends in the ABC Running Group provided me the support and motivation to train. Although there was some friendly competition amongst us, the objective was to complete the run and not outrun the other person. When I was training for

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my first marathon with them, we each had the common goal to complete the run. The fact was we all had the opportunity to run and we each ran our race. Some were faster, some slower, but we all still felt like winners when we completed the race.

So, using this analogy, I would say that while we push forward for growth, we have to create an environment that is inclusive and that people feel they have “hope” to chase their dreams and that they are able to achieve more for themselves and their families. The Government cannot do this alone but will play a crucial role in enabling and creating the ecosystems that Singaporeans feel that they can run their own race and have a fair chance at success. The Government cannot promise success but it must have the vision and provide the environment for Singaporeans and those who chose to make Singapore home to believe that they and their families can do better and succeed in Singapore.

So, with that, Mr Speaker, I support the Budget.

12.50 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, compared to last year’s extraordinary $20.5 billion Resilience Package, this year’s Budget would appear somewhat ordinary, or some would say, "extra" ordinary. The feedback from our GPC colleagues when we met the business sectors ranged from mild positive to negative. Similarly, the feedback I received from the ground has also been less enthusiastic compared to previous Budgets.

Depending on your standpoint and the time horizon in question, the likeability of the Budget differs a great deal. I will touch on some of the feedback I received later.

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Simply put, this Budget is about going back to basics. It has set out to tackle the root cause of our supply side structural weakness, by focusing on the basic factors of our production – labour, land and capital. And if we get it right, it will significantly upgrade our economy, catapult us towards the premier league of economic powers and enhance our long-term survivability.

This Budget and the Economic Strategies Committee (ESC) report also confirm that the Singapore economy is now in the mature phase of growth. What this means is that as a country, we now need to weigh the benefits of economic growth against non-economic factors such as social cohesion, quality of life, environment, and so on.

In economics, there is this textbook term called "efficient frontier". In essence, if you are not on this frontier, one can grow the economy without significant social impact. However, when you are on the frontier, then it will entail having to make trade-offs between economic benefits and social costs.

Singapore, I believe, is already on the frontier. Gone are the days where we can just floor the accelerator and pursue economic growth at full speed. Accepting a slower growth rate 3% to 5% going forward is a recognition of this constraint.

Yet in opting for moderate, all-inclusive growth, I believe this Government has made the right choice. Making fundamental changes may mean that we are unable to pluck all the low-lying economic fruits in the short term, but it can only propel our nation towards greater heights in time to come.

The key word that stands out in this Budget is productivity, and I support the Government for the numerous measures and schemes to maximise the potential

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and performance of our workers and companies.

The ESC report recommended that the Government introduce strong economy-wide fiscal incentives for companies to invest in productivity enhancement and innovation. The $1.1 billion per year over five years to help enterprises and workers raise productivity will amount to about around 0.4% of our annual GDP. Given that raising productivity is the key centerpiece of this year’s Budget and its strategic importance in the economic race, I was a little disappointed with the size at 0.4% of the GDP. I am not sure if this qualifies as a strong economy-wide fiscal incentive as the ESC has recommended.

Nevertheless, this is perhaps only the start and I tend to believe that there would be more upside adjustments as we implement them, as in the case of Workfare and the other Government measures that are introduced.

I applaud the Government for the creation of the National Productivity Fund (NPF), in particular, dedicating about $250 million out of the first $1 billion to raise productivity in the construction sector. This sector rightly deserves top priority, given its dependency on foreign workers. In fact, construction may well be our test case. If we could structurally change the character of our construction industry and significantly uplift its productivity, it would be a role model for other industries to follow.

From the feedback I received on the schemes announced, the SMEs appear to prefer the more direct and immediate NPF approach, that is, the National Productivity Fund. They are hesitant about the Productivity and Innovation Credit scheme, which entails more administrative work and is less readily available as companies must first have the taxable income to enjoy the credits.

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Another feedback received from the GPC Resource Panel is that the word "productivity" may mean different things to different people. We need more clarity into what it means at the national level, and also communicate its definition for what it means for the company and to the individual.

Beyond just announcing and establishing the schemes, more hand-holding and buy-ins may be required to encourage SMEs to think long term and to think big. This is unlike the MNCs and large corporations which will continually innovate and raise productivity standards, with or without the incentives.

Put plainly, innovative culture must take root within the SMEs to do the national effort justice. The chief motivation for businesses to improve their productivity cannot be just to qualify for the schemes but, ultimately, to become bigger and profitable players.

There are a number of economic agencies like IE Singapore, SPRING and EDB, plus various trade associations and chambers, which are servicing our local companies. It would be helpful to harmonise both the existing and the new schemes across the agencies and organisations to make it simpler for firms to seek help and seek financial assistance. To achieve better clarity, we should even explore the possibility of having "M&As" among these agencies, just so that they can be more productive and be more focused on the scheme.

Also, I am glad that the Government's assistance has not left out the individual man in the street, especially the older and low-wage workers. As we climb the skills ladder and ramp up towards an advanced economy, there will be a segment of Singaporeans who may not be able to catch up. Drawing on experience from

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other economies, we are likely to see higher structural unemployment. While I am heartened by the enhancements to WIS and WTS, I hope that the Government can continue to strengthen the safety net in a targeted manner so as to mitigate any social fallout.

While I understand the reason for raising foreign worker levies, we need to be mindful of the unintended consequences. For example, we would not want our increased levies to lead to the so-called "race to the bottom" phenomenon. With higher levies, businesses may opt to pass the hike on to their customers in terms of higher prices, or to the foreign workers in terms of lesser pay, or combination of both. The former will increase business costs while the latter may lead to quality foreign workers shying away from Singapore, and we may end up with the bottom rung of the foreign workforce in Singapore.

To spur productivity further and incentivise hard work, we should also look to further reduce our income tax. I think that is something that many of the middle income group will be looking forward to, especially when they are always on the lower end in terms of receiving goodies from the Budget. So, I hope the Finance Minister will look into this again.

As the Finance Minister had highlighted in his Budget statement, productivity levels in our larger sectors are about 60% that of the global leaders. This means that even if we were to achieve 2% to 3% productivity growth for a decade, we are probably just getting near to the leaders, assuming they are in a standstill. It puts us in the game but we are just playing catching up.

A comparably skilled and productive workforce while essential does not guarantee our long-term livelihood. Potential competing economies that are behind us now may catch up and give us

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a run for our money. So while we need to narrow the productivity gap with the leading economies, we also need strong and globally competitive companies of our own, where skilled and productive workers can value add and be gainfully employed. Hence, I support the strong measures to develop the capabilities of our SMEs.

The ESC has set an ambitious target – doubling the number of local enterprises with revenues of over S$100 million within the next 10 years, from 500 to 1,000. It may seem a tall order, but certainly not an unattainable one. Generous measures announced in the Budget, such as taking on the role of co-investors to grow local private companies and offering tax deductions to angel investors that nurture start-ups, will go a long way in helping companies build capabilities and access much-needed patient capital.

I am also glad that Government has set up the Local Industry Upgrading Programme (LIUP) to strengthen procurement linkages between MNCs and local companies. In case the Finance Minister may not know, this is one suggestion that I had put forward in my speech in Parliament during the debate on the President's Address.

As an export-dependent price taker in the global marketplace, we see strong growth when consumption and spending in major economies such as the US, Europe and China turn euphoric. But when a global downturn like the one we saw last year hits our shores, our GDP takes a sharp hit and we are inevitably swallowed by the tide.

So, if there is a single takeaway from this recession, this has to be that we need to build greater economic resilience. And how do we do so?

SMEs are important part of our corporate ecosystem. They are like the

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lubricant of the local corporate ecosystem and seizing business opportunities big or small within the economy.

However, we do not have a healthy spread of local companies of different sizes. We have a large base of SMEs with sales turnover of $100 million and below; numbering about 160,000. However, beyond the $100-million mark, the number of companies dwindled to only about 530. There is clearly a need to grow more companies to join the ranks of those above $100 million. There is also clearly a need for more companies to join the rank of the very large companies who would be industry leaders in their own right.

Having a strong base of our own very large companies, rooted in Singapore, gives us a bigger handle of our own economic destiny and, hence, greater economic resilience. These companies employ our skilled and productive workers, utilise our infrastructures and real estate, pay returns on our capital and, most importantly, call Singapore their home.

While I am happy to note that ESC has adopted a number of suggestions submitted by the GPC, it has not adopted our suggestion to set up a national investment agency, specifically mandated to grow new industry champions like the way we build SIA, SembCorp, Keppel and so on, 30 to 40 years ago.

We could leverage on our strengths and advantages. We have the capital, we have the talents and we have the infrastructure and the system know-how for new industry champions to emerge. Sir, I want to repeat what I have said in last year's parliamentary sitting which is that we should target to nurture and develop between three and five global brand names, similar to the likes of SIA in the next 10 to 15 years.

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Take the example of CapitaLand. It is a great success story. CapitaLand is now one of Asia's largest real estate companies and exporting real estate services overseas. While they have significant business presence in several growth cities, their head office remains deeply rooted in Singapore. They serve as the queen bee in many of their overseas venture; bring along many of the local brands into their shopping malls they operate. Mr Liew Mun Leong, its CEO, despite being an ex-civil servant, does not stop thinking entrepreneurial and taking calculated business risks.

Data has also suggested that large companies have done better in their internationalising effort when compared to smaller companies. According to the latest Singapore 1000 (S1000) rankings published by the DP Information Group, total annual revenue generated by the top 1,000 local companies in 2009 was $1.7 trillion, an increase of 11.1% over the previous year. Yet, the total overseas revenue of the top 100 biggest companies rose even more – a respectable 17.9% to hit $205 billion.

Top tier Singapore companies were able to grow their overseas revenues far better than the smaller players, despite deeper and more direct exposure to the global recession. So, here, I think the size does matter to a certain extent. And I also agree with the Finance Minister's new incentives to encourage more M&As among the local enterprises.

Today, the economy is recovering with minimal slack. Unemployment remains at a low level of about 2% and bottlenecks remain in many parts of the economy. Externally, commodity prices are on the uptrend again with oil prices today at around US$76 per barrel. Coupled with the impending increase in foreign worker levy, there is this real risk that business

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cost will rise sharply again in the next one to two years. The investments in productivity growth, which would take some time to bear fruit, would not help improve the situation in the short term.

Here, I hope that the Government will keep tab on the costs of doing business and our cost competitiveness even as the economy recovers. In this transformational phase of the economy, many of the businesses may be incurring short-term adjustment costs as well as managing the rising input costs as the economy recovers.

Our own history provides us with some learning lessons. In the 1980s, Singapore was enjoying unprecedented economic growth which, more often than not, was entrenched in the double-figure zone. However, rising business costs took away our competitive edge, as some businesses struggled with high overheads and low profit margins.

We had to respond then, and it was a painful time for all. Wage freezes were introduced, tax cuts were mandated and there were sharp reductions to CPF contributions. So we must not allow history to repeat itself.

Another area which I hope the Government would send a clear signal to is the property market. A volatile and sharply increasing property sector is not conducive for the healthy growth of the economy. It also has direct impact on business costs.

In particular, I hope the Government can pre-empt another emergence of the en bloc fever. Excessive en bloc activities could cause distortions to the property market and add volatility in the short term. Besides, en bloc sales, if too widespread, can be harmful to the environment and waste much of our precious resources. Hence, I believe the

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visible hand of the Government here can do some signaling to our market.

Finally, as parliamentarians scrutinising our financial budget, it is worth taking a quick look at the economic woes the European countries now face and remind us of the importance of prudence.

Take, Greece, for example, currently in the throes of its worst economic crisis. Years of unrestrained government spending, cheap lending and a severe lack of financial checks and balances – all designed to spur growth – have instead landed the world's 27th largest economy with a budget deficit of 12.7% of its GDP. This is more than four times the Eurozone allows. And its debt is at 112% of its GDP. The Greece government is planning a package of austerity measures which include freezing public sector pay, raising taxes and a rise in the petrol tax. It also intends to raise the retirement ages of their public employees to save the cash-strapped pension system. This has resulted in turmoil as the public sector workers are planning a series of nation-wide strikes.

Sir, we need to exercise prudence especially in good times. In the Singapore context, the budget is an investment into the future, both economic and social investments. And at the end of the day, the basic fundamental is that we must live within our means

Mr Speaker, Sir, our national reserves are our last line of defence, and they serve to ensure a strong safety net that we can fall back on. In the face of a global economic meltdown last year, swift action was taken to dip into our national reserves to supplement measures to stimulate the economy. While we understand that the reserves remain strong, it is vital that the Government should continue to look at ways to re-grow our kitty.

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As we can see in budgets of the last few years, NII and NIR are our crucial balancing items in the budget. Given our small and open economy as well as our growing and greying population, strengthening our national reserves is imperative to adequately "capitalising" the country's balance sheet. For a little red dot like us and to remain as a compelling destination for quality foreign investments, we need to maintain our high ratings – our AAA sovereign ratings – as well as demonstrate our ability to maintain a stable Singapore dollar, in addition to the other economic and security pre-requisites. Having a strong balance sheet will allow us to fulfil these objectives.

As recent global events have shown, juggling economic growth with fiscal prudence is nothing short of a high-wire balancing act. While we may never be able to avoid the external factors, building a resilient economy backed up by solid financials is the best, if not the only way, to ensure that we are poised to take a beating, and bounce back, when – not if – it comes.

All in, I applaud the Government for not going on the populist path in its Budget offerings and resolutely work on the basics so that we can maximise opportunities in the new world environment and be the distinctive global city.

Sir, with that, I support the Budget.

1.08 pm

Mr Teo Siong Seng (Nominated Member): Mr Speaker, in general, this Budget is in line with the recommendations of the Economic Strategies Committee (ESC) and aims to transform our economy quite radically.

From a long-term perspective, the Government has taken into account the interest of the SMEs and even the start-ups. The new incentive for angel investors

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will be a boon to SMEs. The nurturing of future business leaders and capital financing for the growth of SMEs is useful in helping some of them to become globally competitive. In particular, the extension of grants to specific industries and clusters will be a great help to the SME sector. It will certainly help and encourage SMEs to pool their resources and efforts to promote productivity and enhance their competitiveness in the face of fierce competition on the regional economies.

We are glad that the Government sees the need to cultivate the SME sector and acknowledges the important contributions of SMEs in the Singapore economy. A very welcome initiative in the Budget was the introduction of a Productivity and Innovation Credit (PIC) scheme. The objective of this new scheme also fulfilled three items of the Budget wish list from the business community, ie, for the Government to provide tax incentives for training, for companies in the service sector to introduce innovative and value-added services as well as for the purchase of machinery to automate processes. In fact, these tax deductions will now apply not only to research and development, but also to acquisition and registration of intellectual property, design activities, automation through technology or software and the training of employees. This is a major enhancement and we are keen to see the benefit filter through to all enterprises, including the SMEs.

The rest of my speech will be in three parts, tweaking of the foreign worker levy to manage the supply of foreign workers, productivity as an ultimate goal and affordable land for SMEs and start-ups.

Everyone will agree that Budget 2010 is a visionary Budget, with an eye to investing for the future. However, some SMEs were disappointed that the Budget

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did not seem to tackle some of their most pressing problems. After a very trying year in 2009, some SMEs have not quite recovered and are still trying to find their feet. The one area we are not so comfortable with was the realisation that the foreign worker levy will be used as a price mechanism to control the growth of the foreign workforce. While we can understand the rationale for wanting to stem the growth of foreign workers, the hike in foreign worker levy could be quite damaging to growth in the medium and long term for some industries.

Raising productivity is important and ensure that we will not fall behind our other countries. But equally important is the need to keep the cogs of the economic wheel moving and remain cost competitive. How much of our economic growth is attributed to the contribution of foreign workers? Or to ask another question: how has the presence of foreign workers improved Singaporeans' quality of life? Many foreign workers are here to do back-breaking jobs that no local Singaporeans would like to do. As more local workers become better educated, they are less likely to accept jobs with lower stature. Currently, 26% of our employed residents possess a university degree and this is expected to increase to 30% by 2015. We are concerned that if the hike in foreign worker levy does cause a cut-back in employment of foreign workers, this could affect operations and growth, if there are insufficient local workers to replace them, or if our productivity does not improve fast enough, especially when we have a low birth rate.

For those companies that need foreign workers, they have no choice but to pay the higher levy. That only means operational costs will increase and they have no choice but to increase the selling price of their goods and services. If we do not have enough manpower and other resources to take on added new orders in

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the world market, we may lose all our customers and business opportunities to our competitors very quickly. Obviously, Singapore is faced with its greatest challenge yet – of how the current workforce can cope with the increased opportunities in the global marketplace, given the clear signal from the Government that employers should wean themselves from the reliance on foreign labour.

Next is productivity. There is going to be a paradigm shift to productivity. When we look at the period over 10 years, this may be more achievable. But we are, at the moment, more concerned with the near term impact and how this may even erode productivity if not properly managed. Productivity is not a new concept to Singapore. The National Productivity Board (NPB) was established in 1972. It was then merged with the Singapore Institute of Standards and Industrial Research (SISIR) to form the Productivity and Standards Board (PSB) in April 1996. This was later renamed SPRING Singapore in April 2002, a statutory board which aims to raise productivity to enhance our competitiveness and economic growth.

Budget 2010 has, however, earmarked productivity as a key strategy and direction to secure Singapore's positioning as an advanced economy, carrying out higher value-added activities and jobs. As the Government has quite rightly said, this is a national effort requiring the inputs and commitments of all Singaporeans. A National Productivity and Continuing Education Council will be set up under the stewardship of Deputy Prime Minister Teo Chee Hean to oversee the work of different Government agencies and promote close collaboration amongst the tripartite partners. Since this will be a high level Council, this means that it will provide another level up from the Government agencies.

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In view of this, I would like to point out one practical concern. Sometimes, there is some disconnect between Government agencies and the industries, especially the SMEs. By this, I mean that there is often a gap between the understanding as perceived by Government agencies and what is actually happening on the ground by the industry players. Hence, real problems faced by the industry can be shoved aside as they may be treated as complaints and grudges rather than actual problems in search of solutions.

At the same time, the business community needs to communicate their concerns more clearly. Perhaps, more effort needs to be put in at the level of the Council or the Government agencies to bridge that disconnect and nurture a greater understanding of how the industry actually operates.

Government agencies themselves need to develop a different mindset, engage more with the industry in order to communicate this vision to make sure the implementation is simple and practical. I believe this would be a more effective way instead of a top-down approach in promoting productivity as a national goal.

Productivity and working smart must be the new motto for all Singaporeans. This is a concept that needs to be embraced by all Singaporean employers and workers alike, and requires a great deal of effort from every quarter. The notion of productivity is not always easily quantifiable. While we can measure the KPI for the manufacturing and construction sectors, how do we actually measure the productivity of the services sector which we are in fact trying to grow in Singapore? It can be very subjective. Singapore's services industry will be greatly enhanced by the presence of the two new Integrated Resorts (IRs), adding to an already vibrant retail hospitality and F&B landscape in Singapore. But how do we apply the productivity model in the best way to the services sector? There is

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no recognised and accepted measurement as services is by nature not as tangible and concrete compared to the manufacturing sector. Should we measure productivity in the services sector by customer experience, product knowledge or service quality? Then, again, these are hardly quantifiable and can at best be based on customer surveys. From my personal experience and feedback from many others, Singaporeans have a long way to go before we can catch up with the US, Japan and Hong Kong in dealing with customers using the personal touch, a caring attitude and the display of outstanding product knowledge.

Still on the subject of productivity, I would like to suggest another way to boost productivity. This may have no correlation with wages. In fact, I strongly believe a happy worker is a productive worker. Workers need to feel that their contributions are being appreciated and are meaningful. Workers are human beings, not robots. And the responsibility of the employer is to do his best to keep them happy and productive. In fact, in today's Straits Times, front page, it reads: "Bad service? The buck stops with the CEO". The eventual productivity of the company relies on the joint efforts of the entire team.

Lastly, I would like to touch on affordable land for SMEs and start-ups. Another recommendation of the Economic Strategies Committee (ESC) that has been taken up by the Budget 2010 is to intensify industrial land use towards more land efficient and higher value added activities. SMEs and start-ups are also included in the rally to create higher value in every sector of our economy. In this regard, it is timely to reiterate the need to provide affordable land and rental for SMEs and start-ups.

Budget 2010 acknowledges the importance of SMEs and the Government

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would like to create a dynamic and viable SME sector. It also encourages a continuous flow of start-ups and new entrants into the economy. Besides the very thorny issue of manpower, one of the major concerns of the SME is the difficulty of sustaining higher rental costs and being strapped by the unavailability of purpose-built industrial commercial premises. In the past, Jurong Town Corporation (JTC) played a crucial role in providing industrial land and factory space to support the growth of local enterprises. Following JTC's withdrawal from the ready-built industrial space market and the divestment of properties to Mapletree in 2008, these properties are now being managed by Real Estate Investment Trusts (REITs). The disadvantage to SMEs is that a REIT manages a property on a purely commercial basis. SMEs and start-ups no longer have the option of finding affordable industrial commercial premises. Perhaps, the Government could look at relocating certain industries into purpose-built hubs, besides those already designated for priority clusters like electronics, infocommunication and media, aerospace, marine and cleantech, biomedical and chemical clusters, engineering and logistics. These could then help accommodate SMEs and start-ups which really need to source affordable industrial and commercial space.

With that, Sir, I support the Budget.

1.20 pm

Mr Low Thia Khiang (Hougang): Mr Speaker, Sir, the Economic Strategies Committee (ESC) calls for a "clear shift" to sustain our future economic growth on skills, innovation and productivity rather than on expanding the labour force. Such ideas are not new.

It was recently reported in the Straits Times that notable economists, including University of Michigan Prof. Linda Lim, have questioned Singapore's obsession

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with GDP growth and suggested that more thought be put into whether this growth is "good" and whom it benefits.

The report also stated that "15 years ago, Nobel Prize-winning Princeton economist Paul Krugman caused a mild sensation by warning that while Singapore's headline growth numbers are impressive, its total factor productivity – the efficiency with which people, capital and land are combined to produce goods and services – was among the lowest in the world."

Although this Government has always considered Singapore a small and unique nation, its fiscal measure, so far, has been fairly conservative. For Budget 2010, the Government is relying again on its own conventional wisdom to address the fundamental problems caused by the implementation of its policies in the past decade.

The "growth at all costs" strategy initiated since the late 90s has resulted in a present state of our economy where low-wage earners are growing dependent on state-funded handouts to subsist and productivity is stagnating at 1% from an influx of cheap foreign labour.

Furthermore, social stress is on the rise and threatening to move our ever-changing society closer to the brink of polarisation. The level of comfort in our public infrastructure like transport and healthcare is also declining upon a population spike of almost a million people in the last decade, with 75% of the increase arriving the last four years alone.

Although the Finance Minister has said in his Budget speech that the impressive growth of the past decade achieved with the help of foreign workers was not a strategy of "growth at all costs" but of growing our economy to raise Singaporean incomes, the increase in

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median income per household member from 2005 to 2008, cited by the Minister, tells only part of the story.

The Report on Wages in Singapore for 2008, released by the Ministry of Manpower, shows clearly the wages of lowest-paid group of workers have remained stagnant for a decade. The wage gap between the higher-skilled occupational group and the lowest-paid group has also widened in 2008 from a decade ago.

Sir, when the Workfare Income Supplement (WIS) has to be revised upward and the qualifying monthly income limit increased to $1,700 to ensure low-wage earners are not left behind in our foreigner-dependent economy, does that not raise an alarm in the Government about the meagre salary that our low-wage workers are getting?

The growth strategy adopted by the Government for the past 10 years has definitely not made these Singaporean workers feel any sense of progress with the nation.

Minister Mentor's speech to the residents of Tanjong Pagar probably summed up the "growth at all costs" strategy best. He said, "Between the two, growth as against no growth? I have no doubt we made the right decision: growth, whatever the inconveniences of competition of space, buses, MRTs, even schools – but we always give preference to our own citizens."

That qualification at the end of Minister Mentor Lee's remark is cold comfort to Singaporeans struggling to make ends meet because there is also the competition for jobs.

This year's Budget is touted as a fiscal measure for Singapore to move "Towards an Advance Economy" with "Superior Skills, Quality Jobs and Higher Incomes".

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The three key elements in this year's Budget are "Raising Productivity", "Growing Globally Competitive Companies" and "Including All Singaporeans in Growth".

Stripping away the rhetoric, the fiscal policies put forth by the Government for 2010 are neither innovative nor groundbreaking enough to reflect the uphill task of making Singapore an advance economy and, more importantly, less dependent on foreign workers.

I am not concerned with the quantum of the Budget. It is the initiatives that worry me, in particular the initiative in raising productivity and income.

First, let me touch on raising productivity. To undo years of dependency on cheap foreign labour and to grow the economy through higher productivity is a difficult journey. The impressive GDP growth of 5% a year in the last decade, as reported by the ESC, was achieved through the expansion of our workforce, specifically with a lot of help from a rapidly growing non-Singaporean workforce.

Years of economic expansion have not done much to help low-wage earners move up the value chain, as the labour statistics had shown. Productivity has stagnated at 1% for the past decade.

Sir, Singaporean workers are constantly asked to up-skill, re-skill, multi-skill, be cheaper, better and faster. On top of all that, they must also work longer and the latest demand on our workforce is to work smarter as well. I must say this Government is highly productive at squeezing every drop of effort and energy from our workers to achieve its desired GDP numbers.

But are Singaporean workers that hard to manage? Are they so lazy or resistant

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to change that they have to be constantly reminded to up-skill, re-skill and multi-skill? Are they so expensive and unproductive that NTUC has to initiate a "Cheaper, Better, Faster" rally call to all companies and workers?

In case the Government has forgotten, this workforce has stood by Singapore since our independence. Singaporean workers have given their best years to grow the economy. They have contributed their blood, sweat and tears to nation-building before the floodgates were opened for foreign workers to continue to satisfy the Government's appetite for high GDP growth.

While the Government has been very pro-business all the while, it should spare a thought for what our workers want out of a healthy economy. Singaporean workers' perspective of employment is simple about bread and butter issues. Can the wages they make meet their expenditure after deducting for transport, meals, CPF, housing, medical fees, etc?

Thus, wages for workers, especially for the low-income group, must go up when the economy is doing well. This is just not the case as the 2008 Report on Wages in Singapore has shown.

The Minister said in his Budget speech that "raising skills and productivity is the only viable way we can achieve higher wages and is the best way to help citizens with low incomes".

Sir, I want to state clearly the responsibility and enabling factor for helping citizens with low income to achieve higher wages rest squarely on the shoulders of the Government. It should not attempt to link the cause of low wages in our healthy economy on the low productivity of our workers.

It is easy to blame our local workforce for low productivity but who opened the

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gates to allow foreign workers to flood the labour market in the first place? The easy access to cheap foreign labour offers little incentive for companies to up their productivity and this is stated in the ESC report. The Government has to assume some responsibility for the low productivity registered in the last decade.

Low-wage workers have lived with low productivity and high growth for the past 10 years with little improvement to their incomes. I made the same comment at last year's Budget debate speech. Meanwhile, this Government has taken every opportunity to bask in the glory of having brought our tiny economy from third world to first. But how long more must our low-wage workers wait to enjoy a first world pay? Must they wait until our productivity reaches 2%-3%?

Low-wage workers have every reason to be concerned with this productivity drive. The Minister has said that the Government's goal is to grow our productivity by 2%-3% per year over the next decade. Only then, real income can go up by one-third in 10 years.

Does this mean that the Government expects low-wage workers to wait another 10 years for something that may not happen as we have witnessed the last 10 years? Low-wage workers do not have the incentive to go for training after training. If they have any time to spare, they will probably take on a second job to supplement their meagre income.

Therefore, the question the Government should answer is, why after decades of promoting productivity and skills training, and despite that we have achieved 5% productivity growth in the 1980s and about 3% in the 1990s, we are back to the same call again?

The next question is, why manual workers like cleaners and garbage

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collectors in developed economies are paid so much more than their counterparts in Singapore? Are the cleaners there more productive than ours or do these developed economies have more compassionate and effective policies to ensure workers at the bottom of the economic ladder do enjoy a decent and dignified life?

With the new emphasis on productive, it seems the Government is suggesting that workers with low income have only themselves to blame because of their low productivity and low skills. The call to workers to up-skill, re-skill and multi-skill may not yield the desired results as well.

I know of machine operators in the construction sector who participated in MOM's safety course and other skills recognition programmes,

only to end up losing their jobs to foreigners or have their wages depressed because foreign workers are prepared to work for lower pay and longer hours.

Sir, I will move on to the issue of dependency on foreign workers in our economy. The Government's intention to use a price mechanism to manage the growth of foreign workers will probably not affect large profitable companies. As you can read in the newspaper, most of the concerns came from SMEs. It will probably create a divided economy with profitable companies hiring foreign workers as per normal and struggling companies relocating or downsizing. The price mechanism will not work too if the total cost of hiring a foreign worker, with a levy thrown in, is below a decent living wage for a Singaporean worker. Most companies will have to hire foreigners because no Singaporean workers will apply. The price mechanism is also opened to abuses. MOM has stated it will step up monitoring and enforcement efforts against employers who try to pass on the levy to the foreign workers. This whole exercise could just end up fattening

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the Government's coffer with little results to show in controlling the ever-expanding foreign workforce. With the Government's determination to expand our economy using productivity growth so that Singaporean workers can finally achieve real wage growth and income level comparable to developed economies, it should take the bold step to remove the foreign workers' levy completely. The Government should just use the dependency ratio to control the growth of foreign workers in Singapore. Dependency ratio can be refined by industry sectors as well as size of the company to allow foreign workers to supplement local manpower when it is necessary. The Government can decide on the dependency ratio in consultation with the industry and set realistic targets on productivity growth in different industrial sectors by gradually reducing the ratio. The savings in foreign workers' levy can then be used by companies to provide employment for local workers when the dependency ratio is reduced, upgrade the production process or send local workers for training to upgrade their skills.

The dependency ratio will force employers to look harder how to re-skill and make Singaporean workers productive instead of looking to relatively low cost foreign workers as an option to compete in the market. It becomes an incentive for the employer to find ways to raise productivity in order to stay competitive. The new system proposed by the Government of using price mechanism and a tiered system levy based on the proportion of foreigners on the payroll to address the dependency on foreign workers is too complicated. It does not look like a system designed to control the growth of foreign workers but as a source of revenue for the Government.

Sir, it was reported in the news that there were about 856,000 work permit

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holders in Singapore as at December. Taking away 196,000 domestic helpers, we are left with 660,000 work permit holders. A $10 to $30 per month increase in levy will translate to an additional $79 million to $238 million per year in work permit levy for the Government.

If I use the low-end of the work permit levy, which is $150 per month, and multiply that by 660,000 workers, the Government is taking in about $1.2 billion per year in work permit levy. If I use the concessionary domestic helper levy which is $170 per month and multiply that by 196,000 workers, the total levy collected by this Government for all 856,000 work permit holders is a conservative estimate of $1.6 billion per year before any increase scheduled on 1st July. I have not even added the levy for the 82,000 S-pass holders. This brings me to the next issue of helping workers upgrade through Continuing Education and Training (CET) and innovation. Although CET and innovation are key components to boost productivity, the emphasis should be on innovation. To achieve an "Advanced Economy" with "Superior Skills, Quality Jobs and Higher Income" requires innovation through research and development, redesigning work method and machinery, information technology and automation. Productivity will be a natural by-product of innovation. While a total of $5.5 billion is set aside to boost productivity over five years, only $1.5 billion is going into R&D via the National Research Fund. The Gross Expenditure of R&D stood at 2.8% in 2008. The ESC has recommended raising that to 3.8% but the Minister highlighted Finland and its R&D spending as an example of putting money to good use. Finland spent about 3.4% of its GDP on R&D at the end of 2000.

Companies such as Sony, LG, Samsung, Acer and Canon are private and highly innovative multinationals. I can hardly name any private entity here that

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comes close to what these companies have achieved. Of course, some of you may say we have Creative, the sound card maker. If you read its story, you will find that Government has very little to do with Creative's growth and success as well. I believe we do have a lot of room to improve with R&D funding and nurturing SMEs into global companies. I urge the Government to take bold steps now rather than a measured approach to make that vision a reality. We should raise the R&D funding and involve SMEs in nation building as much as we can. Let me now move on to continuing education and training and our ageing society.

The Minister has said that the Government will place additional emphasis on our older low-wage workers by providing them the needed support to enhance their skills and continue to be valued in the workplace. While all these CET activities are good for low-wage workers, continuing education does not always have to be work and wage-related. As Singapore is an ageing society, we must include older Singaporeans, working or retired, in the masterplan towards becoming an advanced economy. While CET may serve a purpose for older workers, an adult continuing an education programme should be initiated to cater to the needs of the retirees. Learning as we know is a lifelong process. We should develop a community college for citizens of all ages, especially older Singaporeans who enrich themselves in course not related to their work. The college can have low or minimum entry requirement, courses are totally modular. A senior citizen can earn credit towards a degree or simply for self-enrichment. Entrepreneurs can come in any age group. For an ageing society like Singapore, we should not even have any preconceived ideas on the limitation on what older Singaporeans can do to help build our economy.

In conclusion, Sir, looking at the revenue the Government collects every

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year from the foreign workers levy, it has a moral obligation to ensure our low-wage workers are not left behind. Ten years is a long wait for low-wage earners to move up the economic ladder. Asking these people to wait another decade for that to happen and to depend on State handouts in the interim is wrong. I again urge the Government, as what I did at the last Budget Debate, to work harder to up the wages of the workers soonest possible rather than wait for productivity to improve because that is also conditional upon the affordability of companies to pay the increase in levy. There is no easy way to success. I believe Singaporeans understand that very well. Singaporeans have shown resilience and endured the economic hardship and discomfort with the influx of foreign workers for the past 10 years. On top of that, Singaporeans have to cope with depressed income and rising cost of living such as high utility cost. It is only fair that the Government starts looking at how to uplift the lives of Singaporeans and make them more pleasant. This is a timely wake-up call to the Government as general election is getting nearer.

The Senior Parliamentary Secretary to the Minister for Home Affairs (Mr Masagos Zulkifli B M M): ( In Malay ): [For vernacular speech, please refer to Appendix A.] My parliamentary colleague, Mr Liang, has touched on his aspiration for our economy to join the main league economies. I was driving last Friday and heard the news on the BBC channel that Barclay’s Premier League football club Portsmouth is declared bankrupt. In fact, by just entering that League, a football club can be very wealthy. A club can receive £7 million in transfer fees and broadcasting rights, not counting other income. This is even if Portsmouth is one of the bottom clubs within the Premier League and it can still potentially build its assets in terms of money, players and coaches. However, no matter how high is its income,

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Portsmouth has spent more than what it can earn. Hence, it has to suffer the consequences of its own actions. As a result of being bankrupt, the club will lose its Premier League status and subsequently, lose the right to earn further income as well as the chance to develop.

It struck me how a segment of our community – and I am not saying that it is everyone – can fail in their life in Singapore, even though they live in country that is rich, prosperous and abundant with economic opportunities, just by choosing the wrong path. For example, recently, we see many reports on the beach community phenomenon – which does not refer to those who like relaxing at the beach, but are stranded there because they lost their homes. This situation is often portrayed in the media as associated with the Malay community, which always faces challenges and is described as a community left behind. Some people swiftly attribute it to the lack of ability among the leadership or Government to solve the problem, and so on. What is clear is that even though the Government and community leadership will, and must, help them to have a roof over their heads and be able to rise again, we must not forget the real cause as to why they are stranded there, and not be quick to point fingers.

There are a few similar cases where I am trying to assist. Families facing such misfortune are coming to meet me during the Meet-the-People Session (MPS). After I obtained enough information from the HDB, I was often left puzzled as to why many of them have to suffer such a fate. But what is clear is that many cases are caused by them making incorrect or slow decisions. Many of them have already made substantial profits by selling their flats. Some bought their flats in the early 1970s for only $7,000 and then sold it

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for $200,000. Some reaped this kind of profits not only once, but twice. However, the sales profits that are reaped only when the economy is good and allows homes to be sold at a good profit, subsequently does not bring happiness to them and some of them suffer.

There are those among them who buy new homes that are more expensive and beyond their means. Many do not take into account whether they can continue paying for it. Some invest a lot of money to beautify their house. Some even distribute the sales proceeds to their children, because they love them so much and also to gain favour in the hope that the children will take care of them when they no longer have a house. Some even marry again! When problems occur, whether because they were retrenched or have chronic illness, they do not know how to quickly solve their problems. For instance, they face an increasing loan interest. Eventually, they are not only unable to pay the principal loan, but the interest is now almost equal to the principal loan. Those who no longer own homes, because they were thrown out due to family conflicts, are now stranded at the beach.

This is the Portsmouth Football Club syndrome that is afflicting parts of our community. They should have been prosperous due to the high asset value of their homes that will continue to increase. That asset should have been their investment for old age or for their children to fulfil their ambitions through continuing education, but due to incorrect life choices, the opportunities are gone and they are removed from the successful group and from the main league. What is obvious is that each issue or consequence is not due to a wrong Government policy, but because it is a game between Government policy and individual choice, and sometimes, the assistance available from the community.

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This is my concern when I listened to the speech by the Minister for Finance, Mr Tharman. He promised that after taking into account inflation, income will increase by a third within a decade and it can be achieved if we can increase productivity by upgrading skills through continuous education. The Government will also spend billions of dollars to enhance industries, thus increasing job opportunities that are of high quality and promise better pay. To be sure, this Budget is a milestone budget which will shape the economy in the future.

There are two groups that I am concerned about in the Government’s effort to reshape our economy. The first group is those who I think will succeed in seizing opportunities to upgrade themselves. This group will more or less be able to make their lives more stable. I hope they will be able to learn lessons from the group who lost their homes due to lack of knowledge in investing the profits that they accumulated from selling their houses. We must learn and be aware of what really happened to those who lost such valuable assets. I do not wish to teach them how to spend their money more wisely. I just want to remind everyone, that even with the best Government policies, individuals must make the right choices. This is especially so with the current economic condition that is chaotic and uncertain.

Similarly, their ability to earn income will be unequal and unstable within this uncertain global economic climate currently. In this situation, we must have a savings system that we can use when times are hard. We should not lose our hard earned assets that should have guaranteed a good future. We should not lose those assets due to mistakes, just because we want to try living the good life. I would also like to ask the Government to take steps so that the assets that were just built by certain segments of society can be kept in the

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form of savings or houses, maybe by re-introducing the system of returning the money from loans to the CPF before returning it to the banks, while the profits made may need to be locked up for the time being. With this, hopefully, the community that has just attained success will stay in the main league and is not relegated, just because of wrong life choices. With this, a community that has just progressed will continue progressing, and thus reduces the number of people who still need help to build their lives.

The Government will also spend $2.5 billion to establish Continuing Education and Training. I hope that this fund will be distributed in the best way to build up the second group. This group includes those who are still trapped in the lowest rung of society; still unable to enter the main league. This is the group that is still left behind and even though the Government has already increased assistance to them, in the form of the WIS or subsidies like U-Save, they still have a lack of vision and are gripped by the pressures of daily life. Sometimes, it is due to too much physical labour to feed their families. But I disagree with Mr Low that this is the only reason they will not be able to seize future opportunities. Many of them have family members arguing at home. The house is not peaceful and the children are not taken care of properly. There are also many cases of fathers or husbands in jail. In this matter, I hope that the Government will still pay attention to the issues that they face, as they are already left behind. And with the renewed direction of the economy, we do not want them to be left further behind in the coming years.

To solve the problems I mentioned earlier, I would like to suggest that the Government further strengthen the bodies that often help the needy, who are mostly from the minority groups, and I suggest that the Government increase funding or provide relevant information to self-help bodies like MENDAKI and SINDA. This is

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important because such bodies can broadcast information about upgrading programmes to those who are affected, through suitable language and cultural approach. Government bodies should also adjust their assessment when measuring the success of their policies. For example, it is often said that if 80% of a specific group can benefit from it, it is enough to celebrate the Government body’s effort as a success. That is akin to saying that a teacher feels that it is a success if 80% of his students pass well in examinations.

This is like Pareto principle, and clearly, more resources and funds must be used to upgrade the other 20% in the group. But we should not just abandon this affected group who is facing multiple problems. We must continue helping them find ways to improve their lives, in line with the increase in income of the general population. It is just like a teacher who works as hard as possible, but only able to obtain passes from 80%, as mentioned earlier. In this situation, the community’s satisfaction will come when we are sure that the teacher has taught everyone equally and suited to their own abilities. The results will not be similar but they have been given equal opportunity to succeed.

I am happy that this Budget promises to improve the status of all segments of the community. This not only shows that we are a civilised society, but also will protect the prosperity of the general population. We must provide opportunities for each member of society to join us in the main league and, hopefully, stay together in it.

*Cols. 2563-2568.

Mr Seng Han Thong (Yio Chu Kang): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, we have come out of the recession mainly because of the joint efforts of our tripartite partners. In last year's Budget,

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the main emphasis was to cut cost and to keep jobs. There is a saying among the people, "One, two, three, four, five, go to seek help from the Government, and you will be fine!" There is another saying, "one, two, three, four, five, no job go to e21".

Just look at last year's figures, e2i helped about 53,000 workers to re-skill and/or up-skill or move into another industry. Credit must be given to our joint efforts and perseverance. According to the Ministry of Manpower, the vast majority of jobs created last year went to Singaporeans.

A while ago, Mr Low Thia Khiang complained that we are flooded with foreign workers that rendered Singaporeans out of jobs. The fact is that, in the past two years, due to the economic crisis, many workers around the world could not find jobs. Yet we managed to keep our unemployment rate low while other countries are facing the double digit unemployment rate. I wish that Mr Low could come and visit our e2i one of these days, to see how we are helping Singaporeans to get jobs and to raise productivity. It is a long-term effort. He asked why NTUC advocates "Better Faster and Cheaper". He must know that we are now competing globally. Other countries which are cheaper than us are now better than us while those who are better than us are now also cheaper than us.

He also mentioned that the foreign workers had caused our workers' wages to be depressed. However, we noted that a number of our parliamentary colleagues mentioned earlier that our business sector, our enterprises were in need of foreign workers in order that we could continue to grow.

I support this Budget. We should train and upgrade our workers' skills, and we need more talents. Some Singaporeans

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commented that there was no hongbao , or red packets, in this year’s Budget. My response is that we are given the Shou Bao , to upgrade and up our productivity. The Productivity Council led by Deputy Prime Minister Teo Chee Hean will have a lot of work to do, and we are confident that its recommendations will have an impact on all sectors and all workers.

Mr Low also mentioned that we should show more concern for our older workers. As a matter of fact, we have already introduced many schemes for the elderly workers. I propose that the Productivity Council should recognise the existing course like the WSQ based courses as approved course. Also, the 90%-95% absentee pay is useful but the reimbursement shall be sped up so as to encourage more employers to send their workers for upgrading. We have set the target to raise our productivity by 2% to 3% every year for the next 10 years so that in 10 years’ time, our real income shall be raised by one-third. The question among many Singaporeans is: how are we going to quantify the productivity increases? Is it the number of total output divided by the number of workers? We can provide confidence to the people through the many anecdotes I am going to tell. In order to do this, we must tell our workers not only to work hard, but to have the correct perception as well.

Our workers have been working hard, but some are not able to perceive the right direction and the big picture. They have been pulling the carts, but they have not raised their heads to look at the directions. If they can do that, they will be able to earn better income.

Let me cite a few examples of productivity. First one refers to the Parliament Secretariat.

In the past, after the Finance Minister had announced the Budget, MPs would go outside to queue and collect our Budget

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Book. This year, the Parliament Secretariat is more efficient. Just collect the book from the staff and we did not have to queue up. In the past, we have to tell the staff on duty our number. There were three queues. Each queue covers about 30 numbers, say, from 1 to 30, 31 to 60, and, 61 and above. If you forgot your number, you have to trouble the staff to source for your envelope which contained the book.

The system was improved subsequently. We just queued according to the alphabet of our surname, like L or G. So, there were still three queues, but this time round, we moved faster as we all remember our surnames. The three queues were from A to K, L to O and P to Z.

Now, the system has improved even further. Each of us just go to the counter and get the book. We do not need to queue up. After all, all books are the same and no one will collect more than one copy. We change our mindset and have the confidence in the system. Thus, confidence is the start of productivity.

Second example. During the Chinese New Year period, we went about attending celebrations dinners where yu sheng (raw fish) was served. Everybody was joyful. Why? Because the yu sheng has some auspicious significance, and whenever we participate in taking the yu sheng , we feel good, and we are joyful. This is also a way of raising productivity because restaurants are doing well, customers are feeling good.

Third example is the media interview. In the past, whenever the TV stations interviewed us, they would come in as a team with a cameraman, a soundman and a journalist. There would be four to five people, including a driver. Nowadays, there is no soundman, and only two personnel are involved. The reporter carries a few microphones covering a few

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TV channels. He is accompanied by the cameraman. In the past, after the interview, the driver would have to rush the recorded tape back to the station for editing in time for the interview to be telecast in the programme. Nowadays, a new technique is used whereby the interview is transmitted simultaneously back to the station, giving the editors plenty of time to have the clips ready for telecast in the scheduled programme.

Another example. The Singapore Press Holdings (SPH) encourages more people to distribute newspapers. In the past, newspaper distributors had to carry copies of newspapers with their hands. But now, SPH has designed a carrier with wide opening so that distributors can carry it on the shoulder and distribute the newspapers faster and more efficiently.

Another example is the training given to our bus captains so that they could drive different types of buses – single deck or double deck, long or short buses. In the past, they could only drive along one route. Now, they can ply on many routes. So there are many advantages. They perform so many tasks and, hence, earn better income.

We have many such examples. Mr Low Thia Khiang asked why labour movement advocates "Cheaper Better and Faster". He has his views but he does not have the solutions. We have the views and we have also the solutions. But, of course, the solutions do not come easy. Much efforts and trials have to be carried out to find the best and most workable solutions.

I hope that Deputy Prime Minister Teo Chee Hean and his Productivity Council could make our people, particularly those in the middle and lower income groups, understand the whole concept of productivity. We have to sharpen our

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swords. There is a Chinese saying "if you want to do a good job, you must first sharpen your tool". So we have to make everybody understand that we need to upgrade our skill.

As we want to encourage our workers to up-skill themselves, we must send the correct message to them. As we know, our workers like to change their handphones every now and then. They want to upgrade their handphones so that they can have better facilities to communicate with others and enjoy the convenience. When they upgrade their handphones, they have to pay for it. But, when a worker signs up for a course to upgrade himself, the Government incentivises him. This should be a very good incentive for the workers to upgrade their skills.

To cut waste is also one way to improve productivity. In both the public and private sectors, there are always a lot of functions and events which involve a lot of people, and there is inevitably wastage arising from such events. For these functions, the key performance indicator (KPI) is usually based on how many people were present at the function. No doubt, it is good to have a good turn out, but have we really attracted the type of people that we want for the function? Did the right people turn up? Or did some persons come by just to collect the goodies bag and get the lucky draw prize? We spent a lot of money and time in preparing the goodies bags and lucky draws. But is the money well spent? Is there value in the bags we gave out?

Recently, I went to the Youth Olympics headquarters. I really enjoyed my visit there. The goody bag they gave us expounded the main values of the YOG. It contained materials that explained the aims of the Youth Olympics, such as respect, excellence and friendship. So, when you take this goody bag with you, it is very valuable. When we organise any

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event, the goody bag must be relevant to the event. It is not the weight of the bag but the message we carry back.

Many organisers like to conduct lucky draws to keep the crowd. You have to stay there throughout the whole event in order to be eligible for the prize. We made a few people happy as eventually only a few people would win the prizes, and the rest of the people went home empty handed and disappointed. This is not very desirable.

Thirdly, the buffet served at the functions. There seems to be buffet lunches or dinners served at every function, big or small. Almost without fail, the buffet spread would consist of fried chicken wings, spring rolls and fried noodles. This is not very good either. I think we could have some other types of healthy food or even go without buffet, depending on the timing and occasion.

In short, productivity is a national movement. It is something that everybody should be part of it. Everybody must have confidence in it and enjoy the whole process. I would like to sum it up in three sentences:

Confidence is the start of it.

Joy is part of it.

Love is Heart of it.

Finally, I would like to share with Members this story on productivity. Many people are saying that the best place to invest is China. A western investor asked, "Why is everybody investing in the big cities like Beijing and Shanghai? Surely there must be many other places in China for foreign investment!" He decided to send a team to tour the whole of China in search of better alternative sites to invest in. When the team eventually came to Hainan Island, they came to the conclusion that

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this was the best place to invest in. This investor then went to Hainan Island to see with his own eyes why Hainan Island is the best place to invest. While there, he saw a group of young people toiling under the hot sun, while an old man keep shouting at them, "Productivity, productivity!" He thought to himself, "Even the old folks here are putting more emphasis on productivity, my investment cannot go wrong!" What he did not realise was that the old man was actually shouting, in Hainanese, " bo lat , ti bo ti ?", literally meaning "No strength, yes or no?" He was actually scolding the young workers for not having used more strength in their work, or in positive sense, asking them to work harder, which is, in a way, something to do with productivity.

*Cols. 2569-2576.

2.08 pm

Mr Zaqy Mohamad (Hong Kah): Mr Speaker, Sir, our latest move to ensure our nation’s economic growth reflects Singapore’s track record of always thinking and planning ahead. Since independence, we have not been afraid to take bold steps to make strategic changes to ensure our survival.

The fast changing global economic landscape, with increasing competition, has made it vital for Singapore to adapt and innovate. The Budget seems to follow the Economic Strategies Committee's (ESC) recommendations closely. And for us to succeed in this next chapter, we need Singaporeans and employers to support the changes that are needed.

As we put forth long-range strategies in this increasingly complex and volatile world economy, we need to constantly engage the people and give them visibility on how this Budget and this Government will continue to ensure that they can afford homes, maintain decent careers and sustain quality lifestyle. And, hopefully, many will also embrace

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expanding their families – give birth to more babies to solve our population problem. While the outcome of our target is important, so is the process through which we want to achieve that desired result.

The way forward is to put policies and programmes in place so that we can achieve and sustain growth, including growth of real income for our workers. The Budget – the message to Singaporeans – highlighted various facets, such as lowering the dependency on foreign workers, the lack of direct transfers, for example. But on this point of lowering the dependency of foreign workers, it was interesting to note Mr Low Thia Khiang's criticism of Government's policy to reduce this dependency. In this, he suggests removing the foreign worker levy. In my view, this contradicts his point about declining wages of low income workers. In fact, that would even lower the wages of low income workers even further. He suggests that we go by dependency ratio. I am not sure if he had studied the impact on the companies. I think if he heard Mr Teo Siong Seng's speech earlier, being a businessman, many do feel that there is still a need for foreign workers here.

On the foreign worker levy being a source of Government revenue income, it is a means for us to raise more income. I am not sure what he thinks we are doing with the $1.2 billion, whether we start playing in the casinos. If we look at this year's Budget, there is a lot more being put in WIS and for training of workers to also, hopefully, uplift our low income workers and ensure that they are more sustainable in the long term. So I think we need to look at the bigger picture and see how the PAP Government's solutions interconnect and give us a total solution package that will uplift the income of all Singaporeans.

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One focus of this Budget is to raise the productivity level of our workers and industries by 33% over 10 years. What I think is not commonly discussed is the associated growth in real income. I think when we talk about real income, we talk of cost of living as well. So the question is how do we grow our real incomes in line with productivity growth of 33% over 10 years? Is this possible and will companies buy into paying more for more productive workers?

This is an important question for all of us in this social compact – the Government, people and employers. There is no incentive to push for the productivity target if companies cannot be more profitable, more competitive and more effective, and if our people do not see real growth in their wages to cope with the rising cost of living.

The Budget’s social agenda needs greater visibility, without which the Government will fail in its quest to execute the recommendations of the ESC. The debate today needs to also consider the social compact with Singaporeans – what each of us needs to do to bring greater prosperity and cohesiveness as a nation. Do Singaporeans subscribe to this agenda? That is the question I ask. Do employers subscribe to this agenda? I think that is the other question that has to be asked. It will be hard to achieve this productivity goal if our workers do not see growth in their real income, and employers find it more difficult to do business here.

The growth of Asia will bring many benefits and opportunities. However, the rapid growth of India and China will also bring about greater competition and, especially in this case, I am actually addressing the middle class. These developing countries will breed more highly-skilled, mobile workers who will compete with many of our middle class. There will also be greater competition for

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resources, such as food, energy and even property, causing higher prices in the long term.

Therefore, we need to get companies and workers, especially PMETs, to be more competitive in the open market. We have to be prepared for more to be affected by competition. The middle-income earners will face greater competition and real wages may not increase. Therefore, with our current definitions of housing affordability, long-term CPF savings and even social safety nets will see many falling through the cracks given their asset-rich, cash-poor situation.

Thus, with many young Singaporeans who have accepted the reality of economic uncertainty, some feel disengaged or have unrealistic expectations. The high prices of property or the expectation that they have to take long-term loans to finance their aspirations of a home or quality living means that they expect high increments on their salaries or properties which can increase in value quickly. Similarly, the high expectations on their children to perform in school result in many believing that the cost of raising children is high – due to additional pressure on enrichment classes and quality living.

These have negative impact on why pro-family measures have not been able to produce more babies, why companies do not invest in training because of the high worker turnover, as many workers go for better salaries as well as the seemingly high expectations of first-time home owners.

It will be difficult for the middle class to have direct visibility to the strategies and benefits of this Budget and the ESC's recommendations for as long as we are distracted by the above constraints and expectations. I think the Government needs to do more to engage – across all

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channels and languages – to walk the ground of the middle class and address the roots of dissatisfaction and disengagement.

Sir, I go on to my next point. Sometimes, the Government needs to take steps that cannot be quantified by value added (VA) and KPIs to look after the social agenda. Small businesses should sometimes be viewed to serve a social agenda, not just an economic one. There has to be greater space to create environment for small businesses, as small as two or three persons, to thrive. Because this tier allows for those who are not suited for the workforce, eg, low-skilled but certified technicians, housewives, retirees, long-term unemployed or those seeking a second chance in life.

We recognise that the cost of doing business is high, but there is a social agenda that also needs to be protected. We must continue to find spaces for small businesses as the number of traditional opportunities are becoming limited, eg, small food stalls are taken over by food operators like Kopitiam; school canteens are taken over by operators due to tender process; and even wet markets are at risk.

I think we do not see it, but smaller business owners also help to support the community in different ways, such as through philanthropy or sponsorships to help the community and various social interests.

Global competition will surely weed out the weak, so I agree that Singapore companies must shape up, consolidate or acquire, and find more ways to innovate. Nonetheless, we must be careful as we favour productive companies, we must leave room for those who may be at risk of being sidelined by the economy and employment – such as mid-career professionals and senior technical workers – to find gainful means of living.

As we transform the Singapore economy and tap on the growth of a

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rising Asia, we must ensure that no one is left behind. And the Government rightly talks about the rapid growth of China and India, and of increasing productivity to be competitive. I tend to agree that for many Government agencies they are likely to produce results from their engagements with the global MNCs, national enterprises and even the most successful SMEs. But it is certainly a harder job, with potentially less productive gains, to focus on the low-skilled, low-educated minorities, who are the workers of businessmen. But this is important to prevent the development of an economic underclass of minorities who feel disengaged, disenfranchised, who are not able to reap the economic benefits or not see their role in this transformation that we will embark on.

Specifically on the Malay community, the community has always been supportive of the Government and they, too, would like to know how they can be part of this transformation and what opportunities are in store for them. As it is, many Government agencies send signals to businesses and the wider community that they are gearing up to tap opportunities in China and India – and seeking talent to do so. Thus, many feel that employers are also following suit and that they are left out. They do not have the language ability and, sometimes, the qualifications to find jobs with international firms that are focused on Asia’s growth engines.

So, to help the community understand the changes and directions of the Budget, the Government must ensure there is clear direction and messaging to the community, including opportunities that can benefit the Malays where they can tap growth internationally and how the ESC will bring them better incomes and quality of living.

If at all, this is the group that needs more assistance. For example, for larger

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SMEs and better qualified workers may find it easier to gain access to business networks and high-powered social circles. But this is not so for the usually smaller Malay companies or the less-skilled workers. So, we need to bear this in mind as we execute the ESC's recommendations, otherwise we may risk creating an underclass that will be tough to manage if left unchecked. For example, I raised an issue on the educational performance of the Malay children in Parliament last week. I am glad that the educational achievements of the Malays have progressed over the decades. Despite much intervention and programmes run by the Government and MENDAKI, there are still students who underachieve, particularly in key subjects like Science and Mathematics, but their poor performance could be due to their weak command of English and this may require early intervention.

Surely, it is easy and maybe politically correct for us to say as a Government, let us work with self-help groups like MENDAKI. However, we need to assess if MENDAKI can really cope and how it is going to implement the programmes, given its limited resources – in terms of people on the ground and the funds available. The other issue is that, should this be tackled at a different level, such as the nature versus nurture level, in the way we teach children who come from non-English speaking homes? Socially, it is always easier for teachers and students from culturally similar backgrounds to communicate and explain teachings. More attention is needed if both teacher and student are from different backgrounds or race to provide effective education support and nuturing. But this is just one example, because it is probably the same with workers and businesses as we engage them in a different area.

In reality, I think the community is already trying its best to tackle many social issues honestly with a growing but

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limited talent pool. The community has come together well and, perhaps, trying its best to punch above its weight but I would like to see us find ways for the Government to fight to give the Malay community more direct support through its existing channels such as schools, worker training and industry development agencies to drive the community in the right direction and in a sustained manner.

Mr Speaker, Sir, in Malay, please.

(In Malay) : [For vernacular speech, please refer to Appendix A.] The new direction proposed by the Economic Strategies Committee is well received for the sake of Singapore’s survival, and requires the support and mindset change of all Singaporeans. The Government must ensure that each Singaporean can understand concepts like the meaning of productivity and innovation, especially the low-skilled and low-income group. Actually, this is the group that needs more attention and increase in their income, so that they can escape from the poverty cycle.

Similarly, for small companies that lack resources, many Malay companies are in this category. For instance, in the effort to help such companies as well as low-skilled individuals, it will be good if we can identify the opportunities that are available regionally, and provide information and guidance on how this opportunity can be used.

The Government must be proactive in the effort to engage this group, and not just say that it will cooperate with self-help groups like MENDAKI. This is because MENDAKI has limited resources, as they carry the burden to solve the social challenges of the Malay community.

I hope we will together support Singapore’s new strategy and ensure that no one is left behind.

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(In English) : Mr Speaker, Sir, the success of any Government initiative, policy change and new programme would very much depend on the people and how they respond to them. Hence, constant communication is needed and the Government can play a more proactive role to connect the Government’s intent with the Budget and the ESC with the expectations of employers and workers in order to ensure our success and even survivability as a nation.

Mr Speaker, I support the Budget.

*Cols. 2577-2578.

2.12 pm

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, thank you for allowing me to join the debate.

Sir, the Resilience Package helped us survive the downturn but now we must quickly shift gears and build the economy for the future – one capable of withstanding future shocks. Such an economy needs to be diversified enough, between GDP and GNP, and also between type of industries, local and foreign.

I am happy that this year’s Budget has attempted to operationalise the Economic Strategies Committee's (ESC) recommendations. Many of the ESC's recommendations seem to repeat what many other committees in the past had recommended. The fact that the ESC has come out with similar recommendations just shows the importance of these and that we did not successfully implement some of the things that we said that we wanted to do before. While I am glad that the ESC has shown seriousness in addressing issues faced by local enterprises, I feel more could have been done had the ESC really understood the issues that SMEs face on the ground. While I acknowledge that multinationals will continue to play an important role in

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Singapore’s economic growth, equal emphasis should be placed on developing local enterprises so that Singapore may grow its own world-class group of companies. This must be the clear future focus for the Government if we want a vibrant economy for the future.

Sir, for the way forward, we must commend the ESC for recognising this need but I ask the Government to translate this to a clear objective for MTI and the Government as a whole. The target of having 1,000 local enterprises with revenues above $100 million in the next 10 years is a good one but we must remember that the Government through EDB tried to do this some years ago through the Promising Local Enterprises (PLE) Scheme by attempting to pick winners but this failed. We need to learn from that failure so that we do not make the same mistakes.

Sir, last year, the Action Community for Entrepreneurship (ACE) made several recommendations to the ESC. I would like to briefly mention the recommendations we made but because of the time constraint, I will elaborate during the COS for MTI. The recommendations we made were:

(a) First, to have greater local enterprise development focus – due to the lack of past clear emphasis and adequate Government support for local companies, there is still a dearth of Singapore global brands. There is, therefore, the need for this clear local development focus.

(b) Second, the need for a new agency – it would also have been timely for the establishment of a local enterprise development agency or "Enterprise Singapore", which will be a single agency to develop globally competitive locally-based enterprises. Additionally, this agency could also focus on attracting

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foreign SMEs to locate operations in Singapore. These could, over the long term, become our own future multinationals. Currently, no economic agency, not even the EDB, is doing this role.

(c) Third, setting up of Temasek II or an equivalent investment agency – just as the Government provided developmental funding in nurturing our GLCs which are today big multinationals, we now need such a fund which can help nurture and grow our local enterprises to become larger and succeed as they globalise. In the past years, we had done well in plugging the seed-stage funding of companies, what is missing is growth-stage funding. Many local enterprises cannot find private funding and this is where the Government needs to step in.

So, while the ESC and Budget 2010 have addressed some of these recommendations from ACE, I feel these are not radical enough. If we are serious about creating future local multinationals, we must be bolder and make bigger picture changes.

In addition, we must always keep a watchful eye on costs and I believe we have learnt from the past that we cannot ignore some of these cost pressures that come during growth periods. The Budget and the ESC, unfortunately, failed to address the cost issues significantly enough. We should remember that it is better to have sustainable and manageable growth now rather than to go for a boom and bust model, a mistake that we have made in the past, which puts tremendous pressures and strain on everyone and companies. This time the worst has happened – property prices have significantly escalated during a recession year. The after-effects of this will be detrimental.

Sir, I would like to talk about the social implications of the "Grow at All Costs" and the population policies.

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Sir, Singapore has become too crowded and I want to raise this issue on behalf of my residents and many fellow Singaporeans. We are a young nation and just before we could create an identity for ourselves, Singaporeans are finding themselves losing space and commonality among people here. I want to first say that I agree with the need for Singapore to grow its population by supplementing birth rates with immigration. I have also no issues with the need for us to bring in foreign talent and foreign workers into Singapore. What I do have problems with is the way we have implemented these policies in trying to achieve our long-term goals and the rate at which we have grown our population and workforce. Sir, long term must be long term and we cannot try to short circuit our national development by trying to do everything too quickly. We must not compromise nation building and I feel that, here, policy makers have lost touch with the reality on the ground and underestimated the impact on Singaporeans and on Singapore when they over-zealously tried to implement the two policies – first, the "Grow at All Costs" economic policy and, second, trying to grow the population instantly – and is what I called the "Instant Tree Mentality".

Sir, two years ago, during the Committee of Supply (COS) and Budget debate, I raised both of these issues and that these policies have created difficulty and unhappiness among Singaporeans today and, believe it or not, even new citizens, some of whom have complained to me about the discomfort that they are feeling at seeing so many people around them today. And this feedback has come from PRs. If our new arrivals feel this way, it is clear why Singaporeans are unhappy. It was for this reason I raised these two issues during the Budget debate, but unfortunately we did not take it seriously at that time.

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Sir, by bringing in too many people too quickly, we now compete for the same resources and, therefore, the cost of living has gone up rapidly. The clearest manifestation of this is the cost of HDB flats. Our HDB prices went soaring up as foreigners began competing for more affordable living space. I believe I read from the papers that 25% of PRs make up the buyers of the HDB flats from the open market. And this is significant enough to drive prices up. Even though PRs may be restricted from buying new flats, they still indirectly inflate the prices of new flats as new HDB flats are pegged to prices in the resale market. Furthermore, there are many PRs who also rent HDB flats anyway and this contributes to the upward pressure of HDB flat prices. So, HDB flats, which were built for affordable housing solutions for Singaporeans have now become expensive.

We have also created unnecessary problems for our otherwise efficient transport system as it fell victim to congestion and compromised the welfare of Singaporeans. It is almost impossible to find a seat on buses and MRT trains these days even outside of the regular peak hours – this I have been hearing from too many people. Our roads are jamming up too regularly and at off-peak times too. It is just too stressful to drive on our roads these days. The ERP has not helped because we just have too many cars and too many people on the roads.

Today, all of our public places are overcrowded. Many of my grassroots leaders and friends have told me that they avoid going to shopping centres and other public places because they feel these places are just too crowded for comfort.

Sir, I feel that in making policies, we could have made better political judgment when implementing these two policies that I have mentioned. Could we have grown the economy at a more steady and

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sustainable pace and did we really need to grow our population by another one million people in a span of five years. Should it have been a 20-year target instead? And before growing the population to the current levels, we could have spent resources growing our infrastructure and housing and have these ready to absorb a larger population and worker base.

Sir, the impact on wages has been similar and this has been caused by these two policies that I have mentioned. As many as 300,000 foreigners came to Singapore to work during the job boom in 2007 and 2008. So by last year, foreigners accounted for about a third of the three-million-strong labour force, up from only one quarter in 2004.

By allowing cheap unskilled labour to pour in, through our liberal foreign worker policy, we have depressed the wages of Singaporeans, particularly those from the lower-income who have to contend with cheap labour from overseas doing the same job for much less and so have their bargaining power for higher wages eroded. In fact, as you go down the income bracket, the salaries become even more depressed due to the larger supply of foreign workers available.

We often hear that Singaporeans do not want to do these jobs so we need to bring workers from outside to do so. However, the problem is that Singaporeans do not want to do these jobs primarily because they are paid too little to do so. Sure, some may not do it because of the prestige or social status factor but I think Singaporeans, when it comes to the crunch, are practical and given the choice, they would rather do these jobs than to remain unemployed and unable to support their families. The question is: Are we even giving Singaporeans enough opportunities to do

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some of these jobs? I hope it is not true but I heard the other day from a grassroots leader that a taxi driver told him that there are about 300 or more people being trained in China by one of our large taxi operators who are bringing them to Singapore to work as taxi drivers. They are using a Singapore map to train in China, I was told, and later on they will be brought here. I hope this is wrong but this is what I have heard. If Singaporeans are even deprived of such opportunities then is it fair for us to assume that they are shunning such jobs? But if they need to be motivated to do them, they must at least be able to earn a decent income to ensure that their families do not suffer. You cannot compare the financial obligations of a Singaporean with that of a foreign worker. A foreign worker can work for a low sum while saving on his personal expenditure. Singaporeans, on the other hand, have families to house, bills to pay, children to educate, and so on, all in the face of rising costs. We cannot expect them to work for the same wage that a foreigner would be willing to. The Singaporean, unlike the foreigner who can go back to his home country for a low cost living, has nowhere else to go but here and contend with the cost of living here in Singapore.

We all know that the wages of many lower income Singaporeans have remained stagnant for almost 10 years, maybe some rise last year. For some of them, wages actually have gone down. And the cost of living has continued to rise. So while the median wages have risen as the Minister mentioned in his Budget speech, the wages of lower income Singaporeans remain low while the foreign talent and the new immigrants may have helped raise the median income levels.

Sir, income inequality creates price distortion as income growth for the top earners allows them to spend more resulting in an "expenditure cascade" and

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add upward pressure on prices of necessities such as food and housing, which are two important and large components of a lower-income household’s expenditure. Sir, in the first half of 2009, the inflation rate for the bottom 20% income group was 1.6%, compared to 0.9% for the top 20% Singaporeans. As inflation rate differs for households across the income groups, lower-income households will be worse hit. Budget 2010 tried to address the widening income gap issue through the progressive property tax and enhancements to the WIS scheme. However, the problems of depressed wages and lower purchasing power are real ones and require greater attention and more action. Sir, in the 1990s, we talked about modeling ourselves after Switzerland. We wanted to be the Switzerland of the East. Have we gotten there yet? Yes, I agree that in terms of GDP per capita, we have done really well. But is this an accurate reflection? I was reading through the latest UBS Price and Earnings survey the other day and found that Singapore was ranked 40th in the world in the international comparison of wage levels. Our gross wage level of 26.8 was even lower than Dubai, Hong Kong, South Korea and Taipei, not to mention about a quarter of Zurich's 115.8. In terms of purchasing power, Singapore was ranked even lower – 50th. This is lower than many of the Asian Tigers, including Kuala Lumpur. Needless to say, Zurich's annual income of 106.9 was almost three times higher than that of Singapore's 39.9. So it goes to show that while our GDP per capita is high, we do not see a similar standing in our wages and purchasing power for everyone. This is another indication that the wage divide in Singapore is high enough to distort the per capita figures towards the higher extreme.

Do we need to bring in so many cheap workers altogether? Sir, I recognise that there are some areas where we cannot do

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without foreign workers, but if we need to bring them, then why not focus on bringing them in the key sectors where they are most needed? That way, we can finely balance between supplementing the talent in our workforce yet, calibrating the flow of foreigners and leaving some jobs aside for Singaporeans.

How can we help Singaporeans take on some of these jobs? I think the foreign worker levy hike announced in the Budget is a good start. I feel that the levy hike cannot be a standalone policy and we will need a set of policy tools to effectively manage the issues. I see two more measures that we can use to complement the wage hike. First, by leveraging on the existing Jobs Credit Scheme, we can provide incentives to employers to hire more Singaporeans. By offering companies some monetary incentives, we can also help them allay some of the cost increase incurred by the levy increases, provided they hire Singaporeans.

Sir, I have also previously suggested a minimum wage scheme but critics argued that it would in fact lead to more job losses due to higher wage costs for employers. But we all really need to move up the value chain and this scheme will in fact compel all of us, workers and companies alike, to focus on productivity improvements to compensate for the higher wages to compete, instead of always depending on cheap labour to compete. In order not to burden companies too much with a minimum wage scheme, we could use existing schemes to implement a tweaked minimum wage system. We can start by leveraging on the Workfare Income Supplement (WIS) Scheme.

Sir, the Budget revealed that the scheme will now top up wages up to $1,700 but I feel that it is time to set the minimum wage to $2,000 because of the higher cost of living. The Government may gradually transfer part, if not all, of

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the burden of the WIS on the employer. Sir, the WIS should also be paid in more frequent pay-outs than the current system to aid in the regular cashflow of households. Ideally, monthly would be a good option, but if this becomes administratively difficult then we can certainly follow the Jobs Credit model of a quarterly payout. Sir, by using this three-pronged approach of levy, WIS and Jobs Credit Scheme, we can address the concerns faced by companies and by Singaporeans and strengthen existing measures.

Sir, while I see this year's Budget being somewhat helpful in extending help to companies and households, I feel that more can be done to provide greater assistance and safety mechanisms in the face of uncertainties ahead. I want to reiterate that I do not think that the foreign workers and the population policies of attracting new immigrants into Singapore are wrong. I support these policies as Singapore needs to do these to grow and to be prosperous in the future. I do, however, have a problem with the rate at which we added people and tried to grow the economy with little concern on the impact on Singaporeans. I am sure that when the idea of the need for a much larger population was conceived, it was not intended to happen overnight. So there must have been an error of judgment by the implementers. I was once told when I argued against these that the "Grow at All Cost" policy was intentional and that the Government will deal with the impact when it happens. The impact has happened and the outcome has been negative in some areas. I wish that the policy makers had been willing to listen and slow down a little. Had they done so, we could have avoided all of these problems that Singaporeans are seeing. But this is our chance to make amends. By easing some of the valid social concerns that they have, Singaporeans

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may be motivated to increase their efforts in other areas, including perhaps labour productivity and taking on jobs that they would otherwise not take in the past.

Sir, I have highlighted some of the short-term assistance we may render to help our companies and households to come out of this recession as quickly as possible, while proposing some long-term measures to strengthen our capabilities for SMEs. We must seriously work on this if we want to build a resilient economy for the future.

Sir, on the whole, I support the Budget.

Mrs Josephine Teo: Mr Speaker, Sir, it is said that a journey of a thousand miles begins with a single step. In the long road ahead to transform our economy, we are now taking the first step.

I thank the Finance Minister for taking a medium-term view when making the budget commitments over five years. This sends a strong signal that sustained efforts are needed, and sets the clear expectation that results may not be apparent until after several years.

As we start the journey, we have equipped ourselves with a few key tools. The Economic Strategies Committee's (ESC) recommendations serve as a compass, pointing us in the direction in which the economy must change. The Budget provides resources for the journey. The National Productivity Fund, and the Productivity and Innovation Credits are like food for sustenance and health supplements, energising the businesses to break new ground. Investments in Continuing Education and Training will give our workers sturdy shoes to handle any terrain. Workfare enhancements are like the raincoat and sun block to shield Singaporeans who encounter harsh weather along the way, to help them gain new strength and to journey on.

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While these tools are useful, they do not guarantee success. Close coordination by the National Productivity and Continuing Education Council chaired by Deputy Prime Minister Teo Chee Hean will play a critical role. To improve our chances, I would like to provide some suggestions to the Council but before I share my suggestions, please allow me to respond to some points made by the hon. Member Mr Low Thia Khiang.

Mr Low has levelled many criticisms against the Government but offered no viable alternatives. He ignores the many practical steps taken by the Government to transform the lives of low-wage Singaporeans through Workfare and investments in upgrading their skills. He also neglects to acknowledge the highly effective measures to arrest job losses during the worst ever global financial crisis. How many countries around us, besides Singapore, have been able to keep unemployment low at just 3.4% at the height of the recession.

Sir, I am quite shocked by Mr Low's suggestion to remove the foreign workers' levy altogether. Sir, how does Mr Low propose that the Government allocates the foreign worker quota efficiently to businesses without a levy mechanism? Would it be right for civil servants to pretend to know all about market demand and supply? What about the social costs of foreign workers? Removing the levies is turning a blind eye to the social disamenities they create. Without the levies, foreign workers are even cheaper and even more attractive to businesses, and some of these businesses will find loopholes to get round the quotas, to get more of the cheaper foreign workers. So, the phenomenon of phantom workers which MOM has worked very hard to try and eradicate will become a very present feature. How do we deal with those kinds of issues? Removing the foreign workers' levy would also reduce further

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the incentive by businesses to raise productivity which we need in order for Singaporeans to enjoy sustained wage growth. Sir, I can speak on behalf of our union leaders that we totally and firmly reject Mr Low's disastrous suggestion to remove the foreign workers' levy as it will harm the interests of our workers.

Let me now return to my own suggestions which I offered to the Council, chaired by Deputy Prime Minister Teo.

One suggestion is for the Council to set targets, or critical milestones which will help us to assess progress and alert us when we need to make adjustments along the way. I believe we will need three types of targets.

First, we need to set sectoral targets, tied to international benchmarks. We have set a macro target of 2% to 3% productivity growth per annum for the whole economy. This is too broad. Some sectors have more room for productivity improvement than others.

Setting sectoral targets does not mean that we will necessarily achieve them. But what gets measured gets done. Therefore, setting the target is a way of putting pressure on the stakeholders in that particular sector and it helps to marshall the energies of all involved to move ahead together in a more concerted way.

For example, the construction sector which is due to receive around one quarter of the first $1 billion of the National Productivity Fund. It is a very big commitment to make. And for good accountability, we must know the international benchmark and annual growth target for the sector in order to approve the funds.

The second type of target may be even more important. To achieve

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economic transformation and productivity breakthroughs, whole industries may need to be redeveloped and jobs re-created. A positive example for successful industry redevelopment and job re-creation is the security industry.

The security business used to suffer from poor public image. Contracts were awarded purely on cost. Today, professionalism of security personnel has increased tremendously. Contracts are now awarded based on cost and quality factors.

The Security Industry Regulatory Department (SIRD) of the Singapore Police Force – was prepared to work with the labour movement to undertake the industry redevelopment efforts, providing much policy support which became the key driving force for the industry players to come on board the job re-creation programme. I think it is quite safe to say that without the SIRD's involvement, it is very hard to imagine the breakthroughs achieved by the industry.

However, in some sectors, policy support by Government agencies may be lacking. Agencies tend to take the view that regulation will increase compliance cost. While that is true, we must not shy away from introducing policies that promote healthy growth of specific sectors.

To overcome the inertia, I urge Deputy Prime Minister Teo's Council to identify industry sectors which could be redeveloped and to hold specific agencies accountable for their redevelopment.

Sir, a third type of target is for the business associations. Government is committing $100 million over five years to scale up support for business associations to drive productivity at the industry level, and to facilitate international market access for their members.

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Such support is welcome but also worrying. Just look at some National Sports Associations. Right at the outset, an effective governance structure must be in place to ensure that the funding to business associations is put to good use.

The Government could consider introducing a "bidding" system for business associations to qualify for funding of industry-wide initiatives. Such an approach is not entirely new. In social services, for example, voluntary welfare organisations (VWOs) are already required to "bid" for opportunities to deliver services in various housing estates with Government funding support. Likewise, the National Research Foundation has grant calls and selectively funds groups whose research proposals are aligned to our strategic R&D thrusts. Healthy competition among researchers and social service providers can lead to better quality.

Sir, recently, I visited the Taiwan Design Centre. It is an industry-led organisation which seeks to improve the international market access of Taiwan manufacturers through superior design. It receives only partial Government funding for its activities which it has to actively "bid" for such funding. Other sources of funding are needed and they include membership fees and consultancy service fees. In other words, the Taiwan Design Centre must make itself relevant to its members in order to survive.

We need our business associations to have the same vitality as the Taiwan Design Centre and, of course, our very own Singapore Furniture Industry Council. So I urge the Council to consider a bidding system for Government funding to business associations, coupled with clearly spelt-out industry redevelopment targets. This will help to promote greater accountability and quality.

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Sir, we must remember that the reason for pursuing productivity-driven growth is to enable Singaporeans to enjoy sustainable wage growth at all levels. If we look at the Ministry of Manpower's stated desired outcomes in the Budget estimates, we see very clearly stated "Globally Competitive Workforce", which is one of the desired outcomes. The other three are: (i) Financial Security and Lifelong Employability for Singaporeans; (ii) Progressive Workplaces; and (iii) Customer Responsiveness. In order to stay focused on the goal of inclusive growth, perhaps it is time for us to add "Sustained Wage Growth" to the list of desired outcomes. And we could introduce two related Key Performance Indicators (KPIs).

One KPI is, of course, labour-productivity growth. Another KPI could be our wage share of GDP. Listing these as KPIs does not mean that we hard-code any targets. Nor does it mean that the responsibility lies solely with the Ministry of Manpower. For example, one of the Ministry’s KPIs is "Employment Rate for Residents Aged 60-64". There is no magic number we target to achieve but as a result of such a KPI, we regularly benchmark ourselves against international leaders. Also, the Ministry of Manpower has a variety of initiatives which it implements with the tripartite partners. Listing the KPIs is simply a discipline for us to measure and monitor performance, so that we can take corrective action before it is too late.

Finally, I would like to suggest to Deputy Prime Minister Teo’s Council to consider promoting gain-sharing plans as a sustainable and fair way for companies and businesses to implement productivity initiatives.

In speaking with union leaders and workers, one oft-heard concern is whether the productivity revival means the workers have to work longer and harder for the same pay. While workers

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appreciate that this may be necessary for business competitiveness in the short term, such situations are not sustainable. Union leaders have noted that the investments in CET are good for the workers, but they also point out that the National Productivity Fund and Productivity and Innovation Credit benefit businesses directly.

These productivity measures, if implemented correctly, must lead to improved bottom-lines. This could be due to increased revenues or cost reductions, or both, when the workers demonstrate better and improved efficiency and quality. The productivity gains enjoyed by businesses should be shared so that workers are motivated to find even more ways to contribute to productivity improvements. Some companies, such as SIA Engineering Company, have already introduced such gain-sharing plans and seen good results. Therefore, promoting gain-sharing will ensure greater alignment of interests between businesses and their employees, to further boost the productivity drive.

Mr Speaker, Sir, let me conclude by noting that the road ahead will be long, and it may sometimes be winding, because achieving productivity and innovation-driven growth is easier said than done. Now that we have started, we should also commit to supporting and encouraging one another to stay the course, whatever the challenges.

I have provided several suggestions to the National Productivity and Continuing Education Council, chaired by Deputy Prime Minister Teo, to set targets and to ensure inclusive growth. I hope these suggestions can be considered and incorporated into the Council’s plans.

Sir, I support the Budget.

Mr Low Thia Khiang: Sir, may I have your permission to clarify?

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Mr Speaker: Okay, a short one. We do not have much time.

Mr Low Thia Khiang: Sir, I have a few clarifications. The first is pertaining to what the Member said. She said that the problem of low-wage workers has been addressed by some Government policies, like WIS, and she made the point about it being an international trend, which was the same point made by Member Seng Han Thong.

Sir, although there are measures like WIS, the fact is that the low-wage workers remain as low-wage workers. And for the past 10 years, it has remained so. So is the Government going to be happy to say, "Okay, I am giving you some assistance, and thereby you remain as a low-wage worker?" That is the point I am making.

The second clarification is that it is an international trend, that there is a disparity of wages because of economic structure. Is that a consolation to the Government that because it is an international trend, thereby we should allow our workers to continue to remain as low-wage workers? I thought the PAP Government always says that Singapore is unique and that we are different from others. So, perhaps, we should not use the convenience of international trend to console ourselves to say that, "it is okay because it is an international trend and that our workers can remain as low-wage workers".

The third clarification that I need to make concerns my proposal to urge the Government to abolish the foreign worker levy, which the Member raised. Sir, first of all, she asked how then would the company that needs foreign workers get the workers. I am not saying that we should ban foreign workers. What I am saying is that we should use the dependency ratio to control the import or the number of workers, depending on the

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needs of the business. She is saying that it is difficult to go and look at businesses, to see what exactly they need and the number of foreign workers. But I thought that is the job of the Government. Similarly, the current system proposes a tier system of foreign worker levy, which is equally complicated.

She also raised the question of the foreign worker levy, if removed, will affect the wages of Singaporeans. But, Sir, even with the foreign worker levy in place, Singaporeans' wages are also being dampened and depressed because of the influx of foreign workers. So it does not work in that way as she said that it would affect Singaporeans' wages. On the contrary, with the dependency ratio, and when you tighten it, the company will have to think seriously how to get local workers in order to meet the dependency ratio to employ foreign workers. It becomes an incentive, not a disincentive.

Sir, my view is that the foreign worker levy becomes an opium. Opium for the Government because it collects money from the levy; opium for the businesses because there is a soft option for them instead of employing local workers, paying higher salaries and raising productivity, they can bank on paying levy so that they can continue to have low productivity, relatively lower labour cost, in order to compete in the market.

Lastly, Sir, the Member also said that I made comments to accuse and critcise the Government, but I have no alternatives. That was the same point made by Member Seng Han Thong. He said, "有看法, 沒办法 (y ou kan fa, mei ban fa )."

Sir, I would like to speak now in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] What solutions do Mrs Josephine Teo and Mr

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Seng Han Thong have? What they have articulated in this House, is it an NTUC's programme or Government's solution? Their views are the same as the Government's views. Maybe they do not even have their own views. Because they are members of the Government and NTUC, they have enough resources from the organisation and the Government. So they said they have solutions, but I do not have solutions.

This year is the Year of the Tiger. Based on what I have said above, let me present them a Chinese phrase as a gift. This is what is called "狐假虎威 ( hu jia hui wei )".

*Cols. 2579-2580.

Mr Speaker: Yes, Mrs Teo, do not make a second speech.

Mrs Josephine Teo: Yes, just a quick response. Sir, I am born in the Year of the Monkey. I do not want to be a tiger, a wolf or a fox.

I am puzzled by the Member's description of the foreign worker levy and comparing it to opium because earlier, he had said that there is no denying that our economy needs foreign workers. So I thought opium is bad. I thought we thought of them as being health supplements. But too much of health supplements is also bad. And that is precisely the recognition that we have made.

Sir, the Member talks about it being the Government's job to allocate the quotas. I challenge him to come up with a way in which this can be done in an efficient manner that will meet the needs of businesses in a fair way and also does not allow for any corruptibility to arise. Whenever there are quotas, whenever there are controls, there will always be efforts to circumvent them. This is natural human behaviour. To try and introduce an alternative system to a pricing mechanism is a very dangerous suggestion to make. It

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opens up a whole Pandora's box of difficulties that we have to overcome. At this moment, when we need to direct most of our resources to help the economy make the transformation, to saddle ourselves with unnecessary problems is, I think, completely unwise. And I repeat my point that for myself, for the union leaders and the members I represent, we totally and firmly reject this very disastrous idea.

Mr Low Thia Khiang: Clarification, Sir.

Mr Speaker: Are you replying or clarifying, Mr Low?

Mr Low Thia Khiang: Sir, I am clarifying.

Mr Speaker: But are you asking her to clarify or you want to clarify your speech?

Mr Low Thia Khiang: I am clarifying what she has clarified.

Mr Speaker: How can you clarify her speech?

Mr Low Thia Khiang: No. [ Interruption ]

Mr Speaker: It would not stop.

Mr Low Thia Khiang: Do you want me to reply?

Mr Speaker: What is it that you are clarifying?

Mr Low Thia Khiang: First of all, I would like to clarify that I was also not born in the Year of the Tiger.

Mr Speaker: Okay, let this be the last clarification. A short one.

Mr Low Thia Khiang: Okay. She misunderstood what I said about opium. I am referring to the foreign worker levy as opium and not to the foreign workers as

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opium. She said that it is a dangerous suggestion because of the question of how we reallocate the quota and all that. But I suppose it is not something that is very new to look at how quotas can be allocated and there are many other ways. We can look at how COE is being allocated. So it is a matter of –

Hon. Members: Price mechanism.

Mr Low Thia Khiang: It is still price mechanism but the point is, without price mechanism, you can still look at what the needs of industry are and that is one way to push them towards productivity. [ Interruptions ]

You look at the needs of individual industry. I am not suggesting for one moment that you do not employ foreign workers. But you have to study and look at what is the adjustment level that is needed, and I suppose the Ministry of Manpower can do that.

An hon. Member: Come up with your proposal.

Mr Low Thia Khiang: Let me make a study first and, if you give me the Ministry of Manpower, yes, I will propose to you what is the dependency ratio.

Mr Speaker: Mr Low, resume your seat. Finance Minister, Mr Tharman, do you want to make any comment?

The Minister for Finance (Mr Tharman Shanmugaratnam): No, that is the furthest from my mind.

Mr Speaker: All right. Let us go on with the debate, please. Dr Neo.

3.01 pm

Dr Lily Neo (Jalan Besar): Mr Speaker, there is much to expect in 2010, an

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exciting time ahead which looks promising for Singapore. For many, however, regardless of the economic situation our country is in, their lot will continue to be not much more than a constant struggle just to make ends meet.

Sir, like several of my parliamentary colleagues before me, I shall also speak on low-wage workers.

I support the Minister for Finance's Budget Statement, especially when he spoke about including all Singaporeans in the nation's growth. The emphasis to grow productivity by 2% to 3% over the next decade, if achieved, will see real incomes raised by a third 10 years from now. This is truly commendable.

It would be even more commendable if the lowest income group in our midst will also grow in tandem. It would be difficult, however, to see such a rosy outcome unless those in this lowest income group get all the assistance they need and as much as we can give them. The reason is that as the Minister for Finance said in his Budget speech, "Global competition will continue to threaten the jobs and press down the wages of lower-skilled workers in the coming years." Our aim should be not only to raise their productivity but also, hopefully, to help them out of the poverty trap. In contrast to the more-educated who can tap into the various aid-programmes, these people will need the extra helping hand and perhaps even a hand-holding approach to guide them. It will be a sad state, indeed, if due to our lack of proactive effort, this group becomes left further back as the rest of our population progresses. This will widen the socio-economic gap even even further, resulting in a horrendous weakening of our social fabric in the future.

Sir, week in and week out, at the meet-the-people sessions and block visits, I see such residents. I am sure many of

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my parliamentary colleagues share the same experience. True, for many of these residents, neither the rising property prices nor the flattering economic growth matters much to them. At best, they may look upon them with indifference and disdain as they struggle on to make ends meet. Worse, we will have the unenviable position of seeing a segment of our folks continually mired in an endless bind, not through their lack of effort, whilst we claim to be a nation that is progressing well following one after another economic crisis.

Take, for instance, the single mother; forsaken and left behind with four children by her unfaithful husband; struggling to provide for her family with less than $1,400 per month. Or the single mother who cannot afford the time to find a job because she is struggling to look after her children. What about the two brothers living in a rental flat; the younger one working odd jobs to provide for his older brother stricken with terminal disease and cannot work. Sir, I agree that we do not have permanent solutions for such dire cases. Short-term assistance from ComCare or CDC that the present schemes offer, at best, only tide them through temporarily. I am not suggesting welfarism for them but a more holistic approach to help them.

We need solutions which can have longer-term effects with the aim of helping these low-income families move up the socio-economic ladders. What can we do?

Sir, firstly, we need to recognise that the world we live in has changed so much in the last 10 years. At the very start of the 21st century we were contending with the Y2K bug which turned out to be but a mere whimper. Today, the Internet and its auxiliary, such as Facebook and Twitter, have changed the way we live, work and organise ourselves. Failure to grapple, familiarise and access the

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Internet would leave one behind. Although in Singapore, we pride ourselves as being one of the highest plugged-in nations to the digital world, there are still many in our population who are clueless and have little or no access to the computer. Take, for instance, the many who still contend with long queues either at the banks or public agencies to settle their bills, although it is so much easier to do so online. This is certainly so with many of the older folk and the inconvenience for them will show progressively in time. Sir, the point I am trying to make is the need to recognise that the current world situation requires a departure from previous social thinking. We need to shift away from clinging to the comfortable defensive policy-line of not wishing to breed a crutch-mentality society each time there is a call to help the lower-income group. Simply put, many of our people are in situations where they just cannot do anything to help themselves if left on their own.

Often times, a family's resources are insufficient because of higher drain on what they have. It is common for a family to have one and the only one meagre income to meet all the many basic expenses. I am referring, of course, to Singaporeans in the bottom 20% of households in terms of income. For the households, in terms of income, roughly 218,280 of them are most vulnerable to the shocks generated by volatile conditions. According to the Department of Statistics' Report on Household Expenditure 2007/08, released on 2nd December last year, this lowest 20% of households had to spend more over the last few years, and their expenditure grew at 1.1% per annum from 2002/2003 to 2007/2008. More startlingly, throughout this period, their incomes could never cover their expenditures. Out of the 218,280 households, 105,965 earned below $1,000 a month. This is a cause for concern, if we take into account that only 26,000 of them received financial

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assistance from the CDCs and only 3,000 of them from the Public Assistance Scheme currently.

The schemes directed at our needy presently are vigorously means-tested and are granted sparingly. But, more importantly, such handouts do not provide any long-term solutions. We should seriously review how the current schemes are reaching out to their target group. Let us not lull ourselves into thinking that we already have the policies to help the needy. Let us be reminded that in this area, policy decisions do not always equate to intended effect on the ground. The policy of MCYS on a "many helping hands" approach is on an ad hoc basis by voluntary organisations and it provides even lesser long-term solutions. Sir, what this group needs are holistic assistance schemes. We need to give them more avenues to enable the bread-winners upgrade to better-paying jobs. These folks need schemes designed to "springboard" the family as a whole towards better self-reliance, through having better education, skills and job prospects. May I urge our Government to "leave no one behind" by providing stronger support for the low-wage workers?

It is common for the wife not to work and help supplement the family's income because she has neither the time nor the skills to do so. Top that with having to care for an elderly sick parent and the situation becomes certainly insurmountable. And, frequently, even if the wife finds the time, she is not able to find the work. Now, if she is able to work and we are able to supplement her income of part-time work with something similar to the Workfare Income Supplement (WIS), I am sure we would have improved her lot somewhat and on a more permanent basis.

Sir, transforming an idle workforce of women to an active one will likely

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enhance our economics all round. Find ways conducive for them to work and their home incomes will improve. Get them to work and our increasing dependence on foreign workers, especially in the service sector, will lessen to help us head-off a labour crunch. Perhaps we may want to, for instance, train our non-working women to work as chambermaids on a part-time basis rather than for our hospitality industry to constantly demand for a foreign worker quota.

Education, Sir, is usually the guaranteed road out of poverty. At the very least, this is true in Singapore. However, education here is getting more and more competitive and complex.

Our policy to "teach less and learn more" has the unintended effect of a mushrooming tuition industry. More and more parents are now turning to tuition teachers to ensure that their children get the desired grades in school. Parents share information, amongst themselves and on the Internet, comparing notes on the quality of tuition teachers or centres. Too bad, for those parents who are not net-savvy as they get left out of the loop and have to hunt for good tuition teachers jumping from pillar to post. Parents often think nothing of spending $150 to $200 per subject for their children. Two subjects per child, and most have two children, you are looking at a tidy sum of well over $500 to spend. This is a sum of money few families in Singapore can afford whether they belong to the low-income group or the "sandwich" class.

The children of the resource-poorer families do not enjoy the same access to assistance for their education. Many of these children enter school disadvantaged and there is no and can never be a level playing field for them. Their parents are too resource-poor to give them a leg-up in their education even from early on. Worse still and frequently, their parents are so poorly off that they themselves seem

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even more in need of some kind of assistance. Hence, wittingly or not, education has lost its effect as the great social leveller like in the past. Sir, we need to do something about this or the children of resource-poor families will remain stuck in their miserable world of unequal opportunities forever.

With that note, Sir, I support the Budget.

3.14 pm

Ms Irene Ng Phek Hoong (Tampines): Sir, I would like to commend the Finance Minister for the carefully-crafted Budget. It takes a bold, long-term view, and charts a new course for our economy by focusing on improving productivity.

The Government’s Budget is a statement of its economic priorities. But it must also be underpinned by values and guided by a vision of the type of society that we want to be.

Sir, we want a growing and a more developed economy, a distinctive global city but, at the same time, we also want a society which is more just, equal and decent, in which the poorer and weaker among us are not left behind – a constant refrain in today's sitting. We also want a society which is not only a great place to work but also to live and play. We want to be a happier and more gracious society.

Sir, I applaud the Minister for the moves in this Budget which translate this vision into action. They include the moves to expand the wife relief to a gender-equal spouse relief, to a progressive property tax regime, and to give more help to older low-wage workers. These moves make for a more just and equal society.

While I support the overall thrust of the Budget and the emphasis on productivity, however, I would like to highlight three areas of concern.

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First, the talk about increased productivity has perhaps not unsurprisingly provoked a fear among workers that they would have to work harder and work longer hours, especially with the phased reduction of foreign workers. Presently, it is often the foreign workers who are putting in the long hours and the late and overnight shifts. Will the drive towards greater productivity lead, in fact, to a lower quality of life for Singaporeans, with less time to enjoy the fruits of their labour and to build strong relationships with the family and the community?

This is not about going soft as a society, of not being a hard-driving people; it is about wanting to lead a higher quality of life, one measured not only in terms of material wealth but derived from and deeply rooted in relationships and experiences, where there is more time for families, leisure, cultural pursuits and community service.

Although the Government has assured Singaporeans that increasing productivity does not mean increasing work hours, we need employers to also say it loud and clear. And not only with words, but with deeds. I know of industries today where employers expect workers to routinely put in 12 hours a day as a matter of course. The overtime is, in fact, factored into the salary. This happens in the security industry, where jobs are already largely protected for Singaporeans and permanent residents. Given the security imperative, the only foreigners allowed in this industry are Malaysians, who make up about 20% of unarmed security officers in Singapore.

Sir, I am the Advisor to the Union of Security Employees and I know that most security officers are on compulsory overtime. Often, when the union leaders talk to employers about reducing the work hours from 12 to eight, the usual outcry

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from employers is that there are not sufficient Singaporeans willing to take on the job and, hence, they need security officers to put in 12 hours a day, so that there will be three shifts instead of two. Never mind if they become less productive with fatigue, or that the 12 hours is a reason why Singaporeans are not rushing for these jobs. That and the relatively low pay.

In companies which insist on 12-hour shifts, they kept the basic pay low – $600 to $800 a month. With the compulsory overtime, the pay goes up to about $1,300 to $1,800. My point is that this is already happening in an industry in which foreign workers are not a factor and where employers are already forced to take productivity measures and with some results together with NTUC. Now with the push for greater productivity, will this also be the norm in other industries as the flow of foreign workers is reduced? Workers need to be assured that this will not be the case. At the same time, workers should also change their mindsets and actively apply themselves to finding ways of improving work processes and to add value to their companies.

But how do we get workers to think about improving work methods, upgrading their skills, and so on? Improved welfare for workers is a big carrot. Valuing staff and providing benefits for them is more likely to increase productivity than not. Instilling those values has to start from employers, offering better terms of employment than currently on offer. Sir, the Government should take the lead in this, being the largest employer.

My second concern relates to the welfare of foreign workers. As it is today, they are known to work for little or no pay for months on end to pay back their recruitment agents who charge exorbitant fees. They already work extremely long

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hours, sometimes with no rest day. Given the higher foreign worker levies, what guarantee is there that employers would not work them even harder under worse working conditions, to make up for the fewer numbers of foreign workers in their employ? Indeed, how can we be sure that employers would not pass on the cost of the higher worker levies to these foreign workers by reducing their salaries or some other way?

Sir, we need to step up protection for our foreign workers to ensure they would not be exploited. We should also look into legislation to ensure that employers engage only local recruitment agents who charge reasonable fees – a maximum sum which should be stipulated by the Government. We should also work to improve the working conditions of foreign workers, so that they are not reduced to modern-day slaves.

At the same time, we should recognise that there are some jobs which Singaporeans still tend to shun. A fishmonger in my Tampines Round Market recently came to seek my help to hire a foreigner to work as his assistant. He says he just cannot find a Singaporean to do the job, even though he is willing to pay $1,500 a month. He says Singaporeans just find it too hard work. But how can we change the mindset of Singaporeans towards such jobs once done by foreign workers? But turning to the easy solution of cheaper foreign workers to get things done seems to be increasingly ingrained in the thinking of the average citizen. This starts with the availability of the ubiquitous domestic maid who is expected to work seven days a week and whose job scope includes everything from walking the dog, sending children to school, picking up after them, and taking care of the elderly at home to the never-ending household chores. No need to think about how to do it ourselves, just ask the maid. No need to teach our children to do things for

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themselves, just ask the maid. No wonder many grow up thinking that service jobs are jobs for servants, and turn their noses up at the service industry. In fact, our foreign domestic workers, like the foreign workers in our midst, deserve our respect and gratitude.

How we treat the foreign workers who do the jobs has a direct bearing on how we regard those jobs. Until we change our attitude towards serving others and towards those who serve us, we will continue to find it hard to improve our service levels and productivity in the service sector.

Now I would like to just take up the hon. Member Mr Low Thia Khiang's point. I was hesitant whether I should revisit it but I thought it is worthwhile just to rationally go through the options and spell out the consequences clearly so that everybody understands what our hon. Member is really saying and, perhaps, to also, hopefully, get it cleared in his head as well what he is saying.

Basically, there are right now two tools being used – one is the foreign worker levy and the other is the dependency ratio, and the Government is presently using both. Mr Low is saying, throw away the foreign worker levy and just use the dependency ratio. But let us just look at each option in isolation and see how it works – the foreign worker levy as it is. Let us say there is another Member who says if you remove the foreign worker levy, what will happen? There are two things that will probably happen. The first is that employers will more likely hire more foreigners than Singaporeans for various reasons. One is that they say foreigners are willing to work overtime, take lower pay, attitude is better, late-night shifts, work weekends, and no complaints. So the inclination for employers is to go for what he has called the "opium" option. And the other possible thing that would happen from

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removing the foreign worker levy is to suppress the wages of Singaporeans because the foreigners are willing to work for less and, if more comes in, there will lower wages for all and that will affect the wages of Singaporeans. Surely, that is an option that Mr Low Thia Khiang cannot seriously be considering.

The second option is to use the dependency ratio in isolation, which is what Mr Low Thia Khiang is advocating. Say, we do that, but I am a bit worried because Mr Low Thia Khiang was not very specific about what he meant by dependency ratio, what he had in mind on the numbers – is it one to 20, one to 50, one to 100, one to 1,000, because that would have quite different implications. It is such a sensitive mechanism that every move we make would affect the market conditions in our economic growth. So, it is very easy to say just to apply dependency ratio, but I think we need more details to understand what he really means. Take, for example, the low-wage workers, which he is so concerned about and which all of us are, and one of the lowest wage workers are cleaners. So, let us say that we want to increase the pay of the cleaners, and Mr Low says that means we have to increase the dependency ratio, say, one to 100, just to make it a bit more stark, so for every one foreign worker you need about 100 Singaporeans to work as cleaners. Two things will happen. One is that employers will say that they cannot find the cleaners because Singaporeans do not want to take on those jobs. So, unless we can find Singaporeans to do those jobs, there will be a perennial problem. There is a way around that which NTUC is working on, and I can elaborate on that later. But the second thing that will happen is that services will go down in terms of the cleanliness of your blocks and estates, because employers cannot hire the number of workers they need to do a good job, so the level of cleanliness will go down. Are we willing to put up with

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dirtier blocks, a dirtier Singapore, because we do not have enough cleaners to do the job?

But there is something interesting about the idea of limiting the number of workers so that the wages of local workers are forced to go up. But when that happens, and I am all for higher wages for our low-end workers, we have to know the consequences which are that the cost of living will go up, and somebody has to pay for the higher cost. The employers will not foot the entire labour cost that is going to go up exponentially if we are going to squeeze down the number of foreign workers. So, who will pay for the higher cost? The consumers, ie, Singaporeans will pay for the higher cost. If the Workers' Party comes and tells us that if the cost of living goes up because of this policy that it advocates, it will support the Government, then I think it is something that maybe the Workers' Party might want to put in the manifesto.

Sir, now the Government is using both tools. It is a more sensitive tool, it is not an exact science, it is not perfect, but I think it is a tool that can be worked further. Like many MPs today, I think we are all very concerned about the low-wage workers, but there are other ways of helping them and NTUC is doing a good job. And I think it is unfair to call NTUC the mouthpiece of the Government or not being able to have their own power to negotiate. In fact, having been in the labour movement before, but now not, I can speak maybe more objectively. There were lobbying that went on behind the scenes. The way the labour MPs and labour Ministers have to fight for measures to be implemented to benefit workers is something not often seen in the public – the lobbying that goes on with employers and the Government. So, I

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think we should give more credit to NTUC for the work it is doing.

My third point: the growth of productivity is also predicated on an innovative population and an environment with a strong and supportive value system. Innovation and creativity work hand in hand – and an important key to creativity is in the arts. They generate the sparks which ignite innovation. The arts also play a central role in setting apart great cities from ordinary ones. Hence, support for the arts and the infrastructure which nurtures it is vital.

The arts themselves, however, are not significant beneficiaries of improved productivity. The input of capital and labour for a live performance of the music of Mozart is the same today as was required when they were first composed in the late 18th century. For example, the cellist cannot play any faster or play more than one instrument at one time. And you cannot really have a robot playing the cello in an orchestra.

As such, over time, the cultural sector, which is subject to lower productivity growth, is likely to absorb a higher proportion of the national Budget than those which can benefit from higher productivity growth. The Government should understand the dynamics of this. It should be prepared to allocate more resources to the arts and be proactive in getting public support for this.

In conclusion, this year’s Budget has laid out the economic imperatives. We have to guard that, as our pace of life becomes more frenetic, we do not end up as a materialistic and self-centred society, unable to empathise with those who struggle to catch up or to appreciate the simple things in life, and also the finer ones.

Observe the reaction of some Singaporeans to the construction of rental

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flats near their homes. The rental flats are for needy Singaporeans. Rather than welcome the move to meet the housing needs of the poor among us, they complained that the rental flats blocked their views, that they would reduce the values of their homes, and they would threaten the security of the estate. Sir, I am glad that many Singaporeans disagreed with such views and made that plain. We want to live in a developed city powered by productive workers but this vision needs to be anchored on sound moral values. We must ensure that no one should seek to become wealthy at the expense of the poor and helpless, and that everyone has access to a better quality of life.

With that, I support the Budget.

Mr Low Thia Khiang: Sir, can I clarify?

Mr Speaker: Again, Mr Low.

Mr Low Thia Khiang: I would advise the Member not to look at my suggestion as "tsunami" that we are going to cut off all foreign workers. I have stated very clearly in my speech that we should use dependency ratio to try to mitigate and manage the influx of foreign workers. We are not denying industries the need of foreign workers. I mean, I am not that mad.

Sir, the Member also brought up the same problem that if we do away with the foreign worker levy, it would depress locals' wages. I have explained that I think otherwise. I do not think that is going to be the factor. It is the labour market and also the dependency ratio will play a crucial role in allowing Singaporeans to be properly employed and with reasonable wages. How to go about it? I think I have explained. You need consultation with the industries. You want me to do it myself? I cannot, I have to admit it.

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Lastly, the Member says that if the wages of the low-wage workers, like cleaners, rubbish collectors go up and the wages of some other professions go up, we might end up with a high cost of living. Sir, indeed, that could happen and I thought that is happening also in other countries. But can we say that because we are worried about the cost of living going up, we deny our low-wage workers and let them continue to draw a low wage? Do we want a section of our society to continue to be impoverished? Is it fair?

Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.55 pm.

Sitting according suspended

at 3.32 pm until 3.55 pm.

Sitting resumed at 3.55 pm

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[

Mr Speaker in the Chair]:

ANNUAL BUDGET STATEMENT: Debate resumed.

Mr Baey Yam Keng (Tanjong Pagar): Mr Speaker, Sir, I rise in support of the Budget.

We have set bold and ambitious targets as we embark on the journey to restructure our economy over the next decade. There are various ways to grow an economy, and one way is to increase productivity. The other way is to expand our population, whether by organic growth or through immigration.

Our economy must remain open and welcome foreign talent who can help us to achieve our goals. In the process, we must take in those who can and want to make a long-term contribution to Singapore, and to sink their roots and bring up their next generation in Singapore.

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Singapore is increasingly seen as the city of choice to live in. Many foreigners settle here with their families as permanent residents and citizens. I have officiated at several new citizenship ceremonies for Tanjong Pagar GRC, and I do note that our new citizens are mostly PMETs and in their productive years. At my MPS, I have seen many residents seeking help to appeal for their family members’ applications to be PRs or citizens. Most have been rejected many times, so I know that the ICA has very strict criteria in approving such applications. Singapore does not easily give out our pink ICs.

The episode of Zhang Yuan Yuan last year sparked a huge debate on the loyalty of immigrants, even though Ms Zhang was just a Singapore PR. But is it reasonable for us to expect first generation immigrants to be fully patriotic towards their new country of citizenship? Were our forefathers, the first generation immigrants, more loyal to Singapore or to the country they left? Many first generation Singapore immigrants sent money back dutifully to support their families and to support the war. As time progresses, their loyalty remains quite unchanged even as they hold, initially a British and, subsequently, Singapore passports.

Many of the Chinese immigrants continued their connection to their motherland by joining their respective clan associations in Singapore, whether organised by dialect group, hometown or by surname. But, today, many of the clan associations are facing a challenge in getting new members and making themselves relevant. This may be an indication of the second and of subsequent generations’ diminishing affinity towards China, the parent country of their forefathers, as a form of identity and allegiance.

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Today, many first generation immigrants become Singaporeans for the wealth of opportunities here and the convenience. There has been speculation that one of the main reasons some foreigners, including celebrities like Jet Li and Gong Li, become Singaporeans, for the visa-free access around the world. But these benefits do not flow one way. Jet Li's One Foundation has one of its two headquarters in Singapore. And if Gong Li ever wins an Oscar, she may well be the first Singaporean to do so!

The ties between our new immigrants and their countries of birth can be beneficial to us as their country of adoption. These are personal bridges between countries – a form of soft but enduring diplomacy. As countries such as China and India, where many of immigrants come from, become stronger economically and grow more prominent on the world stage, it is only to be expected that immigrants will still maintain ties with their families, friends, colleagues and business associates in their land of birth. Such ties can create more opportunities and synergy for Singapore and we should view them positively.

Other first world countries seeking to attract more elite talent to remain competitive also face similar challenges regarding the loyalty of new immigrants.

Various governments in the West are making more concerted attempts to instil a sense of shared identity. There was Prime Minister Gordon Brown's official statement of British values to "set down the values, founded in liberty, which define our citizenship and help to define our country", and the French Ministry of Immigration and National Identity. In Australia, the Howard government introduced a citizenship test for immigrants, incorporating questions about Australian history and national values.

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Fortunately, recent studies by Florida State University and University of Illinois found that differences between US-born citizens and new immigrants disappear among the US-born second generation.

I would say the same applies to the Singapore-born second generation immigrants. We should look forward to the second generation immigrants being more patriotic and loyal to Singapore, through education, through a common growing up experience, eating the same hawker food, and not forgetting National Service for the boys. Singapore will be where their personal connections are. Their loyalty to Singapore will naturally be much stronger.

As we seek to integrate new immigrants, we must have a discernible national identity and national values which capture the hearts and minds of all Singaporeans, new and natural.

Due to our short and dynamic history, the Singapore identity is still very much work in progress. It is constantly evolving. With so many changes occurring within a relatively short space of time, establishing our national identity has been a challenge.

Our flexibility and adaptability has served us well and enabled us to leapfrog from Third World to First World. But in an environment where change seems to be our only constant, do we have national characteristics which are truly Singaporean and not just a diluted cocktail derived from our ancestry countries?

I would say that now is the time for us to focus on consolidating aspects of our national culture, recording, preserving and further developing it; supporting and attracting artistes to ensure that its evolution remains relevant and updated so that it will not be lost in the march of time.

Our open economy, our need for new immigrants and the onslaught of globalisation means that there are many other

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external influences competing for the attention of Singaporeans.

Countries with long histories and distinct cultures like China, India, Japan and Korea have deep cultural treasuries to draw upon. We, too, have our own cultural treasury. We must highlight and bring to the awareness of all Singaporeans, especially our young ones.

Our capacity to welcome and embrace change is a key part of our identity, pretty much like the way Singapore welcomed foreign investments soon after our colonial past, when our neighbouring countries were resisting them. Today, many are following our model. We have the foresight and, in a sense, we have been the trend-setter.

We see the results of foreign investments when the factories and labs start running and people start working there. The benefits of an immigrant society only manifest themselves when the immigrants are seen and perceived, as well as see and perceive themselves, as part of Singapore.

Look at the leaders in our Government, corporate sector, academia, arts, sports, civic society and community. They are mostly descendents of immigrants. If Singapore had then closed its doors, not only do we not have Samsui women, the labourers to build our old Parliament House, the people of this Parliament sitting in this Chamber will be very different as well. Or we may not even need 84 Members as it would have been a much smaller population today.

We will only realise the full benefits of today's immigration wave in one and, perhaps, two generations down the road. We may not live long enough to see it but we need to do this now for the survival of the country so that Singapore will still be

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a good place, if not a better place for our children and grandchildren.

Diverse talents bring with them diverse cultures which can enrich our own – provided that it does not get overwhelmed or replaced.

In a paper by John W Berry of Queen's University, Canada, he wrote about inter-cultural relations. Assimilation takes place when ethno-cultural groups do not wish to maintain their cultural identity and seek daily interaction with other cultures. But when there is an interest in maintaining one's original culture, coupled with daily interactions with other groups, integration happens.

Cultures can differ even within the same ethnic groups from different countries. Most Singapore born Chinese and Indians have their ancestries in the southern parts of China and India respectively. On the other hand, new immigrants from China come from all parts of China and many immigrant Indians come from northern India.

I have a female friend from China whose boyfriend is also from China, and both of them work in Singapore. So I asked her why she did not find a Singaporean boyfriend. She said she can connect better with someone from China. This is expected as both of them have a lot more in common with the same background in China. But if they settle down in Singapore, which I hope they will, I am sure their children will not be less Singaporean than any of our children.

We must make a more conscientious effort to integrate immigrants and local-born Singaporeans. The National Integration Council and the Community Integration Fund can play an important role in this, but this effort has to be beyond Government Committees and

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financial resources. It requires a mindset shift, both on the part of existing citizens and new immigrants.

We should strive to create more common memories for people living and growing up in Singapore. One area is the preservation of historical buildings and landmarks as most people still relate dearly to familiar physical forms and structures. My Chinese friend and her boyfriend may not find strolling in Toa Payoh Garden nostalgic, but I hope my children and her children will still be able to visit Chomp Chomp to hunt down their favourite Hokkien mee stall. Food is another important part of our rich cultural heritage that has been and will always be an attraction to locals and foreigners alike.

We should consider setting up a Singapore Food Museum. There is much room to develop this. The history of our food variety will highlight our links to the world. Our taste buds connect us. Most Singaporeans coming home after a long trip will always say that the first thing they must do is to have their char kway teow or laksa fix. I am sure our second generation new citizens who grow up on hawker food will also find their own favourite foods. At the same time, we are also exposed to many interesting new cuisines and dishes from our new immigrants.

The Singapore Food Museum could tell us why Hong Kong noodles did not originate from Hong Kong, why we cannot find Sing Chew Bee Hoon in Singapore, why our Hainanese chicken rice is different from that found on Hainan Island, and why yusheng is popular here but not in China.

We could also look at the different F&B infrastructures and how they are a reflection of the social life in Singapore, from roadside stalls to hawker centres to coffee shops to food courts to celebrity chef restaurants.

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Our tastes will change, our eating habits will evolve. How will the profile of the Singapore population be like in another generation? Will it be like an international buffet spread with each dish in its separate tray? Or will it be rojak with each ingredient retaining its texture and flavour but the taste blended by the prawn paste sauce? Or will it be like the Indian yusheng served with masala peanuts, dates, chutney, coriander and chilli-garlic flakes? Or will Singapore lose its favourite past-time in our appetite for hearty meals and social interaction?

We will all play a part in shaping this outcome for our future generations. With that, I support the Budget.

4.08 pm

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Speaker, Sir, this year's Budget is different from the Budgets of the last few years. For one, it is much more business-oriented with a strategic focus on incentivising companies to boost productivity in different ways. Thankfully, the recession did not impact us as badly as initially feared while measures taken by the Government, such as the Jobs Credit Scheme and the SPUR Programme helped cushioned the impact of retrenchment on the workforce. Having weathered the storm, we are now focusing on increasing our productivity by 2% to 3% each year over the next decade.

Sir, I am all for the push to increase Singapore's productivity rates and I welcome the various incentives that were announced. I hope companies will be motivated to find ways to use technology and innovation in the quest to produce a more productive workforce.

I see two distinct ways in how we can make ourselves more productive. First is for all of us, Singaporeans, to do much more work and transform ourselves from

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human beings to human doings. Or second, is to change our state of mind and bring about perpetual improvement through a ceaseless effort of applying new methods and new technologies of what exist. We should aim at doing more with less exertion and less time. At the same time, I have several concerns on how some measures would impact companies.

The increase in foreign worker levy, I feel, can be a double-edged sword. It could nudge some companies to consider hiring more Singaporeans for jobs instead of foreigners. Companies may automate more job functions and increase productivity rates at the same time. However, there are some that will face problems with this levy increase as the industries they are in are heavily manual and face difficulties hiring Singaporeans. Their operational costs will rise. They may not be able to automate critical functions of the job and may face difficulties in looking for ways to qualify for Productivity and Innovation Tax Credits. Even if they are able to claim for these Credits, this will involve a whole slew of processes as companies will have to look for suitable ways to increase innovation, weigh the costs and benefits, test out systems, and so on. It may not lead to immediate relief and companies will have to bear this higher overhead cost in the meantime.

Speaking on behalf of the manufacturing sector and being in manufacturing myself, I would like to ask if the Government must stick to its announced schedule of levy increases, the availability of an access to the various incentives and new tax credits should be done quickly. The incentive should be drawn ahead of or concurrent with the timing of levy increases. This will help SMEs and manufacturers offset the cost increases due to them.

Sir, all of these measures may still not drive up productivity if the workforce is

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not motivated to give their best at work. This is fundamental. Some SMEs are at a loss as to how they can boost their workers' morale and improve productivity rates. I would like to suggest that SPRING Singapore look into forming clusters of SMEs in the same industry and conduct sharing sessions. These sessions should highlight best practices and new ways of boosting workers' morale, share information on the latest technologies available that can be relevant to the SMEs in that industry and guide them in how to tap into the various schemes.

Further on productivity, Sir, I would like to propose that either the mascot Teamy the Bee makes a rousing return to spur fresh vigour and vitality to renewed productivity movement or a new mascot be identified. I can still remember what Teamy preached, (Singing) "Good, better, best, never let it rest, if your good is better, make your better best!" [ Applause ]

I am sure this is ingrained in the minds of many from my generation as Teamy drove us to always think about how we can do things better and more efficiently then.

On R&D, while the expanded incentives are welcoming, it stops short of being more forward-looking. To make it more attractive, the Finance Minister could have extend exemptions for loyalty income for intellectual properties created as a result of the R&D initiatives.

Turning to the issue of skills upgrading, I welcome the announcement on the enhanced WIS as well as the WTS which is a new scheme to encourage older workers to upgrade their skills. May I ask how will information on WTS be disseminated to older workers? I hope this information can be practically passed down to both employers and older

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workers so that their initiative to take up WTS can go both ways.

I also feel that we should take a more holistic approach towards learning and skills training. For us to become a society that fully embraces lifelong learning, we should encourage Singaporeans to view learning and skills training as part of life and not just as a means to an end. For that, I would like to suggest that a lifelong learning account be set up for adult Singaporeans, much like how school children have Edusave accounts. With this account, Singaporeans can be encouraged to take charge of their training and learning needs and the Government can provide support by providing subsidies or credits for courses. Higher subsidies can be offered for WDA courses and perhaps progressively, smaller subsidies for other courses, depending on their relevance and their extent of value such courses add towards the creation of a wholesome worker. Means testing can be considered to help the lower-income more in paying to learn and upgrade their skills. This will lead to a more holistic development of Singaporeans and can result in uncovering talent in unexpected ways.

Mr Speaker, Sir, another concern I have is the effectiveness of recent measures to curb property speculation. Judging from the responses to recent launches, lots of people are still thronging showrooms and snapping up properties like hot cakes.

Our greatest concern is the continued speculative impact this will have in pushing up HDB flat prices, making it more and more frustrating for HDB home buyers. I am particularly concerned with the policy of allowing private property owners to also own HDB flats. While the policy clearly stipulates that they must live in the HDB flats, I suspect, judging from many anecdotal cases in my house-to-house visits, that they are renting their resale flats out. If no stern action is taken, it will encourage more dual property owners to do the

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same. Furthermore, it does not help that the current policy also allows HDB owners to rent their flats out after the minimum three-year occupation period. Sir, while the numbers may be quite small currently, I fear that it will swell if no measures are introduced. It will deprive genuine buyers who can only afford HDB housing from making their purchases. I would like to ask that, one, the Minister reviews current policies of allowing sale of HDB resale flats after one year if they are purchased with a bank loan. And two, allowing rental of HDB flats after the three-year occupation period unless there are strong valid reasons to do so. Harsh action should also be taken against those who rent out their flats illegally.

Sir, allow me now to speak in Malay.

( In Malay ): _[For vernacular speech, please refer to Appendix A.]_Mr Speaker, the Government announced many incentives to encourage companies to increase their productivity. I hope that Malay companies will also answer this call, and find ways to innovate and use the latest technology. In addition to making some of the jobs easier, the use of technology can help a company increase its production rate and save costs.

I hope that Malay workers can take advantage of the WIS training scheme and the new WTS scheme for older workers. Age must not necessarily be a barrier to the upgrading of skills. The upgrading of skills and life-long learning are values that should be inculcated in each worker, because these will open up more advancement opportunities at work.

Moving on to social issues, I would like to urge the community to be more forward looking in making decisions and not just look for quick fixes to solve problems. It is due to such thinking that many people are deceived by get-rich-quick schemes.

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This is also related to housing issues. I found that many of those caught in the problem of having to live at beaches faced such an outcome because they were in debt and then sold their homes to obtain cash. They did not anticipate how they will be able to buy a new house or where their families will live after that even though they have small children. The sales proceeds are used up and are not enough to pay for houses at the market rate. As a result, they are forced to stay with their relatives or at the beaches while waiting for rental flats from the Government. A house is not something that should be pawned. It is a necessity for the family and also a long-term investment. In addition, the supply of rental flats is limited, and those who qualify and the most needy, according to HDB policies, will be given priority compared to those who just sold their homes, reaped the profits and did not think about the implications.

Such mentality can also be seen among those who prefer "use first and pay later" schemes, be it for vacation packages, or buying gold, diamonds or other things. Their short-term needs are given priority but, in the long run, this will be perilous as such packages can involve high interest rates. A Malay proverb states "You have to be willing to face difficulties first, in order to have it easier later". But there are those who prefer to enjoy themselves first and feel the pain later! In this matter, maybe the Mendaki Foundation can increase efforts to educate the community about financial management and the pitfalls of making decisions without long-term considerations.

Quick fix attitudes are also present when looking for solutions to social problems like promiscuous teenagers. We often hear of parents forcing their children, who are too young, to get married quickly after getting pregnant or because they are too promiscuous with

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their partners. It is not wrong to encourage their children to marry, but the parents must consider whether the child and the partner are ready mentally, psychologically and financially. Also, are the families ready to give support and guidance if problems occur?

Mr Speaker, in solving the issue of dysfunctional families, I would like to suggest that a study be made on whether the marriage courses implemented now benefit couples in their first few years of marriage. Currently, in addition to pre-marriage courses, the formal guidance sessions provided are counselling sessions for couples who are about to divorce. I feel that we must provide more marriage guidance courses for couples who are between their first and third year of marriage. For young couples within the high-risk group, such courses must be made compulsory.

With that, I support the 2010 Budget that was presented by the Minister of Finance.

*Cols. 2581-2584.

4.22 pm

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, I would like to congratulate the Government for presenting this Budget aimed at enhancing productivity to improve the quality of work, to earn better income for the workers thereby improving the standard of living of the people.

The main focus of my speech today is the impact of these measures to the middle- and lower-income people, and the understanding and concern of these people in this Budget.

Most of the ordinary folks feel that this Budget does not benefit them. I want to explain that this is not the case. The

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assistance plans introduced last year are still in place, including the rebates on utilities bill, and the WIS scheme to encourage them to upgrade themselves by raising their skills. These schemes involve big sums of money on the part of Government, and they are just like money in the pockets of the people. This is like the parents investing in their children's education. The parents pay heavily on these expenses, but the children do not seem to realise it or appreciate it. It is the same logic.

The increases in assistance this year are quite substantial, these assistance schemes will help the lower-wages worker to upgrade themselves, without which they will not have the opportunity to go for skills training. They would have to pay for their transport, their expenses and their tuition fees. As for the WIS and WTS, they help the workers in paying for their training costs so that they can earn higher wages when they complete such training. Because of the higher productivity and competitiveness, the nation will benefit too.

As for the middle class, they would like to know whether the Government has anything for them. With the savings account assistance to those who are old and sickly, the wives of these people will also benefit. Such packages will help to balance the needs of the various classes in society and to pay for their family expenditures. With these packages, they will have extra money to pay for their children's tuition fees.

Another issue is the raising of productivity. Some people think that productivity means having eight workers to complete the job done by 10 workers. This is not quite so. With 10 workers, a bigger cake could be made so that more workers will enjoy. It does not mean that two workers will be redundant and be retrenched. We should ensure that with the raising of productivity, workers'

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wages will also rise. With the raising productivity, the benefits should go to the workers too.

Now, let me talk on an issue which concerns everybody – the foreign workers. Many people think that we should welcome foreign talents because they make greater contributions to our economy. However, we must not forget that low-skilled foreign workers are still needed by us because in certain sectors local workers are not willing to take on such jobs. In my constituency, many lower-wage workers are hostile to the foreign workers because they think that foreign workers is a cause that depresses their wages.

I know of two bus companies where 30%-40% of their bus drivers come from Malaysia and China. These bus captains are part of the group of bus captains in our bus fleets. The two bus companies advertised in the papers to recruit bus drivers. Very few local workers were interested in the job. A bus worker's salary is about $1,800, which is not small. However, local people are not willing to undertake such jobs. If we do not allow foreign workers to drive our buses, then who is going to make our bus service work? Today, we need to wait for just five minutes to catch a bus and arrive at our destination on time. If there are not enough drivers to keep our buses running, then how would our public transportation system function?

All right, you increase the salaries of the bus drivers to attract the locals. Then, who is going to pay for the increased cost? Are Singaporeans willing to pay higher bus fares? The same problem applies to the crane operators, the construction workers and the other manual workers. Most of them are not Singaporeans, simply because Singaporeans are not willing to take on this kind of job. I know of one cleaning

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contractor who asked me to help him secure some local people to work for them in their company. The industry pays about $800-$1,000 per month to each worker. Foreign workers are paid only $600. However, MOM lists down the dependency ratio as 7:1. You must have seven local workers before you can employ one foreign worker. Even with the salary of more than $1,000, it does not attract local workers.

Some older workers came to see me at the Meet-the-People session. They were over 60 years old, and they told me that they did not have money even for breakfast the next morning. I introduced them to the contractor who offered them the jobs. They worked for three days and quit. Singaporeans just do not want to do this kind of work. So, how can you blame the employers for employing foreign workers? Every Singaporean knows that if they do not want to do this kind of work, someone else would have to do it. If you stop the foreign workers from coming here to work, then the whole system will come to a stop. All of my colleagues agree with me that, in the HDB estates, foreign workers have made very good contribution by undertaking the cleaning jobs. I know of one family who complained to me the cleaning workers in his precinct were lazy and too old. They want young, fast workers, efficient workers. They do not want local workers who are old, they want young foreign workers to do the job. I changed the local workers to foreign workers.

Foreign workers are not a burden to us. Their presence here is not entirely negative. Without foreign workers, things could be worse. However, for those Singaporeans who do not like to undertake manual work, I hope they will join the e2i training courses. If they do not want to do heavy work, manual work, then they should go for further training to do some high value-added work – work that carries higher wages.

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From this year's Budget, we can see that our Finance Minister is very concerned with our low-wage and the middle-income workers. We hope that such vision can be achieved within 10 years, that is, raising our productivity by one-third and raising our workers' income.

*Cols. 2585-2588.

4.35 pm

Ms Ellen Lee (Sembawang): Mr Speaker, Sir, thank you for allowing me to join in this Debate.

Ms Ellen Lee (Sembawang): I would like to compliment the Finance Minister for his extraordinary Budget and no pun intended. It has received much compliments, particularly from friends from Western countries whom I have spoken to as they were watching us closely. It is not an exaggeration to say that they were green with envy. Indeed, I look forward to seeing how the many schemes, programmes and funding to help make our businesses and Singaporeans more productive will indeed translate to overall increase in productivity in the next few years.

From our own Singaporeans, the reaction has been widely reported. Many people were concerned with the immediate impact of the reduction of foreign workers overall across industries and the gradual increase in foreign levies leading to overall rise in costs of living as well. This would be true in the short term but we should not stop overhauling the current undesirable practices and make changes just to avoid short term impacts. I believe this Budget has been carefully crafted to cater to and address the ongoing challenges and serve the different needs of Singapore and Singaporeans. Nevertheless, I would like to say a few words on the following points.

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One, raising productivity. The Budget has rolled out various incentives, schemes and even a formal Council to drive home the Productivity message. I noticed that the majority of these are targeted at the private sector. In my opinion the civil service (which includes Ministries and statutory boards) should also do self-examination and look at further enhancing and increasing productivity of its workforce and its processes and service levels. Different Ministries and statutory boards would need to define the exact parameters where they could increase productivity and also examine what is meant by productivity increase in their varied workplaces and operating environment. I am not sure whether reducing or not increasing manpower is an option but our civil service should explore further innovation and technology to enhance effectiveness and efficiency. I believe we would help to reduce our future "budgets" and translate to lesser tax on the populace and also better convince the private sector if our civil service can "lead by example" and be more productive.

Two, helping the elderly. This year’s Budget did provide for the elderly as in previous years. I applaud the Medisave top-ups varying from $200 to $500 depending on the elderly’s age, income and the annual value of their homes and the higher payouts to older workers for the WIS. Notwithstanding, I hope to see more done for this increasing segment of people in Singapore. Medisave top-ups may not totally address the rising healthcare costs faced by the older folks. Instead, the Medisave-approved uses should be re-examined so as to enlarge its scope and ambit, in particular for the older Singaporeans. For example, for uses such as detailed health screening for those above 55 years of age or at an older age for a start. By the same token, to adopt a preventive approach towards healthcare and wellness, the Government should support health screening and seriously consider the provision of a standardised

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comprehensive health screening package across the polyclinics and restructured hospitals at a subsidised rate for the older folks.

I am happy to note that those earning up to $1,700 a month will now be eligible for WIS, up from $1,500. This will help supplement the income of some of the older workers. However, I am aware that some industries still pay a very low basic salary and there is a significant component of their monthly salary from overtime work. In view of this, we should review the criteria for the WIS entitlement, that is, consider using basic wage instead of gross wage in tabulation of whether WIS will be dished out. Using basic salary will not penalise hardworking workers who work overtime to bring more monies home and it also truly reflect the value of the job and their effort.

As a positive signal to those looking after their aged parents, grandparents or great-grandparents, the dependant relief claim has increased. I strongly support this and I am very glad that it is being addressed. However, in view of rising costs, maintenance and prices of food, homes, nursing or healthcare needs of the aged, this tax relief may not sufficiently "compensate" the younger generation who maintain and look after their elderly parents, grandparents or great-grandparents, in addition to looking after their own families. I urge the Government to periodically review and assess if the amount of relief will effectively help these youngsters.

With significant amounts of funding and resources dedicated to worker training and embracing of technology and innovation, I urge the Government to continue to provide enhanced funding and incentives both for older workers and their companies in this aspect of training. In particular, the ADVANTAGE scheme by WDA to help older workers previously

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should be further enhanced so as to further encourage companies to embark on utilising new technology and innovation to help assist and facilitate older workers to be more productive.

Three, the "Sandwiched-Class". Sir, I would like to finally touch on the middle-class who are the sandwiched group. Many who fall in this category sometimes feel they would be better off if they were richer or very poor. With the economy picking up speed and possibly rising cost of living starting to set in with higher oil prices as well as price of housing, etc, the sandwiched class will face even greater challenges. They have little ones to take care of as well as their aged parents (and many of them with only one or no siblings because their parents belong to the era where there was a stop-at-two policy). The problem and pressure on this sandwiched class are greatest when their parents or in-laws are of age or ageing and their children are still relatively young. With the 20% income tax concession removed and the Budget not particularly addressing the needs of this segment, Sir, I hope that we can help them by having some policies or schemes available where they can tap on.

Mr Deputy Speaker, Sir, may I seek to speak in Mandarin?

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Many Singaporeans feel they are under a lot of pressure with rising living cost. They have no time to even take a breather. The new Budget is to improve productivity by increasing foreign worker levy to reduce our dependency on them. Singaporeans, at the same time, will have to do more work to keep their jobs. By common thinking, this is obviously making Singaporeans work more, spend more time on their jobs, which will inevitably take away their spare time and make their life even harder.

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Low-wage, low-skill workers think they are limited in intellectual capability, they do not have the confidence to complete the course if they are sent to study IT. They are afraid that if they fail, they might even lose their original jobs!

Although many experts and academia have expressed their views on improving productivity, but this alone cannot entirely relieve employees’ worries. I hope the Minister can provide more tangible information, give the workers more assurance to appease their worries, so they are willing to go for training, which will give them a better future.

( In English ): Sir, Deputy Speaker, on the whole, I do support the Budget as being a forward looking one critical for the long-term survival of Singapore.

*Cols. 2589-2590.

Mr Sin Boon Ann (Tampines): Sir, Singapore’s survival and long term sustainability depends almost exclusively on the ability of its leadership to renew its economic relevance from time to time. Nobody owes Singapore or Singaporeans a living. Unless Singapore is able to refresh itself, its place in the world will be overtaken by other economies that are much larger, endowed with more resources and are much cheaper to operate in. India and China are at the moment snapping at our heels.

It is of necessity, therefore, that we re-look at our value proposition periodically to ensure our place in the world.

This Budget broadly reflects the Government’s endorsement of the recommendations of the Economic Strategies Committee, set up specifically for such a review.

Now, on principle, I support the recommendations of the Committee as the proposals broadly reflect the

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arguments that I have been advocating in this House over the years, specifically on how we can effectively compete in the global economy.

Sir, while I support the proposals and, consequently, the Budget, I, nonetheless, do have some comments which I shall limit to three for now in the interest of time.

First, the need to balance increasing productivity and cost competitiveness. Minister Tharman acknowledges the need to increase our productivity to be in line with first world economies. However our Minister also recognises that reducing the foreign labour supply will make it difficult for many industries to remain competitive.

At present, there are foreign workers who are hired in industries that require substantial manual labour. These workers are typically organised in large numbers and move about in groups from dormitories to worksites. They are largely isolated from the general population and they keep largely to themselves. As a workforce, they serve the useful purpose of providing the manpower in jobs that are not popular with Singaporeans. They make our exports competitive by keeping our costs low and this in turn helps to keep these industries in Singapore so that there will be other good jobs for Singaporeans. They also provide the buffer for retrenchment in bad times and, in many cases, give Singaporeans some reprieve. Increasing the cost of hiring these workers

in the name of improving productivity will unnecessarily run the real risk of raising the operating costs and, thus, making us less competitive. Worse still, if these companies should decide to relocate elsewhere.

In choosing to generally force improvements on productivity, we must recognise that our cost of labour and factors of production will necessarily go up, making us more costly relative to

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other places. We went through this path before in the 80s when we decided to increase the unit cost of labour by pushing through measures to increase productivity through automation. What happened was well documented. Our competitiveness went down and with it, our economic performance. Subsequently, through a mix of imported and local labour, we were able to find the right balance to carry us on the path of strong economic growth.

However, it now appears that the pendulum is swinging in the other direction. In response to ground sentiments, it would seem to be a knee-jerk reaction to now impose a carte blanche restriction on foreign labour across the board. This approach may not necessarily serve our interest whether in the near or long term. As it is, in response to the new initiatives, we are beginning to hear the moans of those who are in industries that are heavily dependent on foreign labour.

What we require is a clearer definition of our policy on foreign labour. We can understand the restrictions and the need to improve the productivity in certain sectors such as those in the financial and services industry. Improving productivity in these areas will, I have no doubt, raise the quality of the Singapore worker and his salary, relative to his compatriots in the more developed economies. However, I am not sure if the same can be said about putting similar restrictions in other areas, particularly in export-oriented industries where cost competiveness is of primary importance.

Secondly, growing globally competitive companies. Sir, I am glad to note that the Government has recognised the need to grow globally competitive companies. As I have said previously in this House, as a small economy competing in the global economy, one of the ways we can overcome our limitations is to build up our store of proprietary knowledge. Leveraging on proprietary knowledge, whether

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acquired by transfer or through research and development, will allow Singapore, without any significant natural advantage, to generate a high gross domestic product and with it, the possibility of Singaporeans realising the dreams of living the Swiss quality of life. In this regard, I support the ESC's proposal to encourage more focus on research and development and acquisition of intellectual property rights to enhance our competitiveness.

While I applaud the initiative of the Government in this regard, I feel that it should go further. Acquiring the intellectual property right is only part of the equation. Enforcing it is another issue altogether. Ownership and enforcement of rights go hand in hand. It is no use owning rights to property when the owner has difficulty enforcing those rights. The issue of enforcement is a serious one in countries where such laws are lax, particularly in Asia. This Budget does not say anything about helping Singapore intellectual property rights owners to enforce their rights. Hopefully, in next year's Budget, our Government can be more helpful in offering to help these enterprises with intellectual property rights to enforce these rights whether in civil courts here or elsewhere.

Thirdly, including all Singaporeans in growth. Sir, it is heartening to note that the Government has not forgotten the need to include all Singaporeans in the country's growth. The measures introduced in this year's Budget are no doubt welcomed. However, I am not sure if participating in Singapore's growth is truly felt by all Singaporeans. I refer in particular to a group of young and successful Singaporeans who are caught in a very unusual situation.

Currently, it is our Government's stated intention that we want to root our people in this country through home ownership. We have done this relatively

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successfully through providing Singaporeans with subsidised homes at affordable prices; and we have also placed a restriction through limiting the household income of those who are eligible to $8,000. This is to ensure that public subsidised housing is reserved for the majority of lower and middle-class Singaporeans. Indeed as a result of our housing policy, we were able to put approximately 80% of our population into public housing estates.

Sir, the household income eligibility restriction, unfortunately, has made it very difficult for a certain group of young Singaporeans to acquire public homes directly from the Government. These are those who have worked a few years after graduating before deciding to settle down with their spouses. Unfortunately, by that time, many would have found that their combined salaries would have exceeded the household income limit that the HDB has imposed on eligible applicants. We agree that qualifying to apply for an HDB flat is not a good enough reason to get married. However, the fact remains that with rising salaries, it would be very easy for the couple to reach the limit very early in their career; and this assumes that a person has found the right person early on. Generally, people recognise the windfall that comes from selling their subsidised flats in the open market. For any sensible and thinking Singaporean, capital gain is indeed a welcomed gift from the Government. Sir, you can well imagine how disappointed these people can be at the thought of not being able to participate in something that is meant to benefit Singaporeans. Indeed, one should not be surprised at the sentiment expressed by these people about being left out.

Perhaps, the Government should review the household income ceiling of those who are eligible to apply or, for that

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matter, substitute it with another set of rules altogether for people in this category. I do know that wherever the line is drawn, there will be those will not benefit as opposed to those who will. However, not doing anything about the present situation now is equally untenable. We must remember that not everyone whose combined income exceeds the household limit can well afford private housing or that they will necessarily have the ability to stump out the cash for the cash portion if they bought an HDB flat from the secondary market. What is worse is with the perception of property prices rising regularly, many are feeling that owning a decent home is increasingly going to be out of their reach soon.

Sir, in concluding, notwithstanding my earlier comments, I know that this is a Budget that is aimed at making us more competitive in the global economy. We know that as a small country if we are able to leverage on knowledge as the foundation of our economy and we are able to work smart and productively, I have every confidence that Singapore will continue to be that paradise home where we can live, work and play while leading joyful and meaningful lives.

With that, Sir, I support the Minister’s Budget Statement.

4.51 pm

Mdm Ho Geok Choo (West Coast): Sir, in the next 10 years, the Government will embark on a journey to transform our economy and level up Singaporeans and the economy to a higher productive phase. Differing opinions on the Budget have emerged.

"Work smart" is our new productivity mantra. I advocate a holistic approach to productivity. The "spouse relief" is a step towards deepening the notion of productivity.

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The improvements in the Budget such as dependent related reliefs for taxpayers, top up to Medifund, Medisave and ElderCare Endowment Fund, top-up to Post-Secondary Education Account and Workfare Income Supplement (WIS) and course fees relief from $3,500 to $5,500 are all indicators of a multi-pronged helping hands approach for the needy. Ever prudent, the subtle approach of the Government is what a caring Government is all about.

Sir, the productivity growth journey entails nurturing industry champions to walk the talk. Up-skilling, innovation and productivity cannot be achieved overnight. We need to mount a continuous movement and identify drivers for this journey.

Sir, the 2010 Budget recommends many schemes to drive productivity growth but the big question is: how and who will be able to implement these schemes for Singaporeans?

We must not be misled into looking for KPIs as indicators of success for these schemes. Rather, we should focus on the process and the journey to reach these indicators.

A new entity, the National Productivity and Continuing Education Council (NPCEC) will be formed, comprising the Government, employers and the unions. Will this new entity be assuming the role of the former National Productivity Board? Besides a tripartite composition, I propose for Tripartite Plus Council. The Plus refers to those in the fraternity making up the CET centres, who are the "implementers" on the ground and who will be able to give the real feedback on what works and what does not.

In its basic definition, productivity is about more output and fewer resources. To create an efficient and quality

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workforce, employers too have to be innovative and find new ways to create value in the people. Productivity does not mean working longer hours and doing away with the older staff. Productivity is about the employer rolling up his sleeves to work together with his employees. Employers are the prime movers of mindset change.

Sir, the success story of Singapore is about its people and its leaders, who must be able to influence, cajole, persuade, negotiate and convince their people to align with their vision and mission.

Even more so in this global market economy, where we are encouraging our local SMEs and our global growth companies (GGCs) to venture beyond the shores of Singapore, we need to nurture a breed of global managers, who must not only be competent in people managing skills but also be able to appreciate the nuances of culture and language and people-to-people dealings.

In this respect, the GLCs like ST Engineering, may consider seconding some of their best and experienced global PMETs to these fast growing SMEs or GGCs, so that through such an apprenticeship training process, we can help accelerate the productivity growth of SMEs and the likes. Here, we will inculcate in Singapore, a tradition of the able and capable bringing along the less ready in the fast lane of productivity growth. In this, the Government would do well to cultivate a few champion GLCs to start the track.

Sir, People Managers in particular HR practitioners play an important bridging role in driving productivity. We should embrace Total Productivity in this transformation, which is not just about the output and a different way of doing things. It is about what Minister Mentor had said in the 1980s, something to the effect of "Fair play, fair share". This

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connotes a deep understanding about having a balanced worklife, a balanced distribution of responsibilities between the husband and wife, a supportive environment for bringing up children, a motivated workforce with a high happiness index. It is also timely to transform CEOs to Chief People Officers (CPOs) to spearhead the transformation in companies to the next level of growth.

As we look to boost our productivity levels, we should not forget our pioneers who helped set the course for our growth. Serving the country in our formative years, they were altruistic and slogged productively. We would do well to find a way to engage them as resource members or mentors as many of the retired ones are still in a position to contribute meaningfully.

The NPCEC's high profile holds much promise and potential. What would be interesting are its plans for CET centres. How does it intend to strengthen CET centres?

It is critical that corporate leaders and PMETs acquire soft skills which are the hardest of skills to master. The Workforce Development Agency (WDA) must be commended for its foresight in instituting a national CET centre for training up PMETs in the WSQ human capital management skills. Sir, how else can we convince corporate leaders to walk the talk, by enrolling themselves in such courses?

At this juncture, it is important to highlight that CET centres are not just another pathway for those who have missed out on mainstream education. In fact, there are national CET centres for graduates and post-graduate PMETs for diverse competency-based training. CET centres for such PMETs focus on competency-based training to prepare

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learners for the performance of a task and augments their academic qualifications. It is important to note that the definition of "PMETs" embrace high-flying professionals, mangers, executives and technical personnel. The Government should invest more money in these PMETs CET centres in strengthening the CET system because PMETs are the prime movers of change and transformation.

A good starting point for the NPCEC is to review the funding formula for PMETs CET centres. This is so because the funding budget put up by such centres last year was in line with the economic situation then. In particular, the manpower budget for such centres were extremely stringent. With the turnaround in the economy, will the NPCEC review the funding formula in order to reflect the higher manpower and operating costs, so as to enable these centres to operate optimally?

Sir, the deliverables of the productivity growth journey entails the fine details of the what and the how, and the flexibility in wanting to find the next best solutions.

I would like to share my most pleasant experience with a civil servant, whose exemplary behaviour is one to be emulated. Mr John Lim Keng Hong, an Estates Officer at HDB's Administration Department, went out of his way to help a middle-aged, unemployed and divorced resident of Boon Lay. Sick and homeless, the resident came to us for help. John looked into the matter and when he found out that the resident’s financial resources were deficient, recommended an alternative – a home for the destitute where the resident would be looked after. John could have easily told my resident that he was ineligible to rent a flat. He did not have to make any arrangement with MCYS for an alternative accommodation. Sir, we need more officers like John, who has the right mix of Intelligence Quotient (IQ) and Emotional Quotient (EQ).

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Initiative should come from within; it is not found in the standard operating procedures (SOPs).

Sir, this example signifies the spirit and essence of productivity. A civil servant, who thought out of the box and who went beyond the call of duty. Productivity is not about clarity of roles and sticking to the job descriptions and SOPs. Productivity thrives in fluidity and the courage to step out of line to find the next best alternatives.

Sir, I look forward to the NPCEC working with the CET centres and the media to drive home the message on productivity. Total productivity is about how to get people to work together smarter, how to get better and more output as well as attaining a high happiness index.

It is timely then that we mount a total productivity outreach movement where we walk the talk about productivity daily. The media should be collaborating with CET centres who are the grassroots organisations of the work eco-system to share case studies, scenarios and problem solving of PMETs at work.

Will the NPCEC be prepared to fund an outreach programme on a proposed PMETs Workplace Toolkit, which will see the collaboration of the media, may be Business Times (BT) and the CET centre? I suggest a regular interactive column in BT to engage PMETs on the whole gamut of productivity issues in Singapore.

Sir, the plight of displaced PMETs seems to have been overlooked in Budget 2010. These displaced PMETs, mostly middle aged, are not ready to retire yet because they still have many good years left in them and they need to work to survive. Sadly, there are very few takers for them as employers look at employees past 50 or even in their mid 40s as being past their shelf life.

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Displaced PMETs have knowledge and expertise that employers can tap into; they can serve as mentors to younger colleagues and, most importantly, they are willing to be trained and reskilled. They are realistic in their expectations and are willing to work more for less. The PMETs whom I have come into contact, ask for a chance to lead their life with respect and dignity and not to be treated as curry leaves – discarded after they have been used to enhance the curry.

Sir, many of these displaced PMETs who would like to upgrade themselves are not given a chance to do so because SPUR only subsidises PMETs who are sponsored by their employers. We should reconsider the subsidy criteria for displaced PMETs so that they, too, will not be left out of the opportunity to up-skill or re-skill. On their own, they would have to pay the full fees of the national WSQ courseware. It is unfortunate that many of them shy away from institutional help because of the "face" issue.

Sir, another important development in this year's Budget is the raise of the levy rates and the reduction of the local-foreign manpower ratio over the next three years to regulate the flow of foreign workers. By the impending measures, there will be a compression of the foreign workers' levy tiers and the gradual increase in levies would result in a double whammy for small-scale businesses.

I fear that there would be dire consequences on small businesses, which employ a critical number of foreign workers as they cannot find Singaporeans to do the jobs, for example, the confectionaries and the hairdressing salons, even though they may be prepared to pay Singaporeans higher salaries. The measures would increase the potential of these outfits folding up. What is there to help these small businesses? Sure, they can tap on the sums available to innovate

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but being small-scale operations, it makes it a challenge. So are we giving the signal that small-scale businesses are not only vulnerable but can also be terminated anytime?

Sir, all said, I want to end by commending the Minister for Finance. The 2010 Budget does presents a quantum leap in faith by the Government. To some, it may be old wine in a new bottle but we all know how precious old wine is. One thing is certain – the 10-year yatra (journey), to achieve our desired productivity growth and to transform our economy begins with a decisive step by every Singaporean.

On this note, Sir, I support the Budget.

The Minister of State, Prime Minister's Office (Mr Heng Chee How): Mr Deputy Speaker, Sir, I give my fullest support to the Government's decision to drive for sustained productivity improvement.

Singapore is one of the original Asian Tiger economies, characterised by fast growth and rising living standards and describe in Chinese as a state of " long teng hu yue " – like a dragon flying and tiger prancing. As the world is much more volatile and uncertain than ever before, we must all the more make sure that we retain our good sense and strong drive, and make this Year of the Tiger and, indeed, the coming 10 years a roaring success, by adding wings to our Tiger economy – " ru hu tien yi ".

Doing this will not be at all easy. But we have little choice. Our labour productivity growth rates have been trending downwards over the past two decades. Even more worrying, they have turned negative since 2007. This means that the labour force has been expanding faster than the growth in value-add and this undermines our ability to stay

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competitive in product and service innovation. We must not be complacent, or risk finding ourselves like a tiger driven out of its habitat and rendered vulnerable – " hu luo ping yang ". Our living standards will then be forced down and this is a serious matter.

That is why we must pay close attention to the need to boost our productivity, even though the subject may appear unglamorous.

Now that the intent to reverse the decline has been declared, I want to urge everyone to stay the course and remain focused on the fundamentals. We must neither expect immediate miracles nor seek short cuts. For example, there will be year-to-year fluctuations. Coming out of the recession last year, there will be excess capacity in the economy and labour productivity this year should see a good turnaround as the excess capacity is mopped up, with little change in operating methods. So this is a cyclical thing. But what we need is sustained, continuous structural improvement and we must be careful not to declare victory too early.

Another mirage to watch for is over-stretching the manpower and/or cheap-sourcing masquerading as productivity improvement. Once full labour utilisation is reached, without new work methods, innovation and technology, just by stretching the manpower more thinly can give a short-term impression of labour productivity improvement on a per headcount basis, but that will only build up a backlash later on in quality, safety issues. The ongoing Toyota saga reminds us that fast growth without corresponding capability building and the sustain quality culture can lead to quality and standards going awry, eventually bringing down a hard-earned reputation. So we must watch closely the employment and unemployment rates for locals across the age bands, and track quality and standards as we push productivity to

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make sure that we are not just trading them off one against another.

The immediate next part of the journey will involve a mindshift on the judicious use of foreign manpower. Why did we have a big foreign manpower segment that was growing at a rate that was so quick? Well, because there were opportunities to be seized, business orders to be captured; both as a country and as individual companies. So we struck the balance between the immediate and continuous structural improvement in a certain way because, as they say, make hay while the sun shines, and many were too busy chopping trees to sharpen the axe. But if you keep on doing this, then progressively we will become less well placed as time goes on unless we couple that with sufficient ongoing productivity improvement. The easy growth in manpower supply allowed us to get the job done at hand, without having to worry about changing our working models and methods. But in the end, it comes back to haunt us.

From recent dialogues and feedback with players in the hotel and general business sectors, one clear and strong reaction is that if the Government makes foreign manpower more expensive or harder to come by, and yet Singaporeans are not stepping forward to take up the positions, then standards will go down instead of up and we also read from the media concerns that the cost of services will go up as a result.

What is left unsaid in all these is really the crux of the matter – which is an assumption that work processes, work technology, work scopes, work value will all largely stay put. Of course, if none of these key parameters change, then the situation could, indeed, degenerate into a vicious cycle of falling standards or of poaching skilled manpower from one another, driving up costs. But it need not be so. Indeed, it must not be so. Our

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mindset must be one of adaptation and re-creation.

One feedback I got from the hotels is, interestingly, that they hoped that the Government would stop preventing them from getting a higher productivity from their foreign manpower. They said that the current regulations are absolutely strict about what work a foreign employee may do within a hotel and forbid cross-deployment to any other job in the hotel. This is unlike the flexibility that they have with their Singaporeans and PR employees.

Let me quote you one such specific feedback. I quote, "We are driven towards productivity and we want our colleagues to be mobilised when needed, however, for work permit holders they can only work in the department that they have been hired. During 2009, our hotels wrote in to MOM to seek permission to allow us to cross deploy during the downturn to help us to save jobs and we received a written reply from the Ministry rejecting the request. Going forward, we hope that this can be looked into to help the hotels." This comes from Ms Magdelene Tai, Director of HR, Fairmont and Swissotel Singapore.

Not alone, but we hear such feedback. My reaction to such feedback is three-fold. First, going forward, Government agencies have to expect suggestions from companies across different sectors on increasing total labour productivity measures that seek to optimise both local and foreign manpower within their companies and how do we view these and deal with them.

Secondly, such measures, if acceded to, will make foreign manpower more productive, within those companies. This will help companies either reduce their reliance on such foreign manpower for the same volume of work, or derive a "productivity buffer" with which to man

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new areas without immediately needing to seek an increase in such foreign manpower.

Thirdly, local employees must understand that their companies will be finding ways and means to increase productivity from their total manpower that is local and foreign and, therefore, it is in their own interest to continue to increase their own value on the job and their employability through skills upgrading, re-skilling and multi-skilling.

In this national upgrading effort, we will encounter much gnashing of teeth as we reshape our entrenched ways of doing things, and as we correct the chronic over-dependency on labour to the detriment of productivity. We must also remind ourselves that just as in the past, new opportunities will arise in the future, new business orders will come. How will we then respond to these new opportunities? Do we do a U-turn again? I hope not because we have to stay the course and press on with the work needed to move to a higher level of productivity, quality and competitiveness. This is a test of our resolve and we must not waver or blink.

Sir, on the Budget, it is good that Government is setting aside money via the Productivity and Innovation Tax Credits and infusing $1.1 billion in the first instance into the National Productivity Fund to catalyse breakthroughs and improvements. The key to success is timeliness.

Tax Credits are savings to be enjoyed after the fact of spending. How much this will help companies make the full upfront spending and investments, remains to be seen especially in the case of SMEs.

For upfront grants, it is the National Productivity Fund, the $1.1 billion that I

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believe, will be more attractive for many companies, big and small. This incentive portion is going to make more difference that the Tax Credits portion, at least in the initial period in energising quantum increase in productivity.

I have already received positive feedback from key players in the hotel sector that they will be actively tapping the incentives when the rules are known. For example, the Grand Hyatt Hotel is piloting a system called the TRITON which will significantly improve operational responsiveness and customer satisfaction by integrating guest services with real-time feedback and staff deployment across the Front Office, Engineering, Housekeeping, Guest Services, Security, F&B, and the IT departments.

Many leading hotels, such as the Millennium and Copthorne Group of hotels, are also working on bringing in another technological improvement called the "opti-keeper". This system promises to optimise cleaning schedules dynamically to cut waste through matching the supply and demand for manpower, manage the quality of cleaning effectively, target training and improve operational communications within the housekeeping function.

Over in the construction sector, companies are also alive to the possibilities of innovation and productivity improvement. Shimizu Corporation Singapore, for example, is introducing the use of the aluminium wall form work system in lieu of the traditional timber form work in order to improve the construction cycle time and achieve high quality concrete finishing. This system, according to the company, reduces the bottleneck of crane usage and cuts down on labour for form work erection due to the ease of use. It also allows for the reuse of form work materials, therefore, achieving greater cost efficiency.

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The ability to deploy technology to get more bang for the manpower buck, and to be scalable beyond a single company to a group or cluster and to the whole industry is important and must be encouraged.

There are two critical elements for success. One, the rules must be set out soonest so that companies
can start applying. Early successes can then be publicised and this would be useful in spurring the others on. Secondly, the rules should be simple enough, and the channels not overly complex like who goes to apply for what and where and red tape minimised, so that the "water can get to the crops" quickly. The rules can be tiered to incentivise big-impact initiatives. The incentives should also be more attractive than currently available incentives from the various economic agencies, or else we cannot expect a bigger impact on behaviour.

There is a clear need, Sir, to develop a strong capability, whether via certain public agencies or by growing a network of process and job redesign expertise, to help companies with this restructuring toward higher productivity, especially for SMEs as they employ the majority of the workforce. The know-how may not be there in the company. To ensure that business gets the productivity improvement and not just busyness, the potential twin-bottlenecks of know-how and knowledgeable consultancy must be anticipated and tackled in advance. We must not assume that the only impediment to productivity improvement is money. The ESC recommended the creation of a body to conduct productivity research. I strongly urge that such a body be set up immediately. But research is not enough. I also strongly urge that this body be tasked not only with conducting research, but also be given appropriate resources to reach out to industries, so that knowledge and expertise are

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proactively "pushed" out to industries through channels such as industry associations and business chambers, and complemented by expanding strong networks of suitably qualified consultants to assist companies along the way. I am convinced that a "push" mode of operations is needed to complement the more passive "pull" method, where companies approach the said body to tap its findings. We have to do both quickly and aggressively.

Sir, I applaud the twin emphasis on Productivity and Inclusive Growth. We must not let the drive for Productivity be at the expense of the equally important task of employment and re-employment of older workers and back-to-work women, of best-sourcing, and of the training, fair treatment and care for the growing pool of contract workers and low-skilled, low-income workers.

The Workfare Training Scheme (WTS) just announced is a very good initiative aimed at making training for low-skilled workers attractive to both companies and workers even during non-recessionary times. This is practical, in view of the documented slowing down in the SPUR scheme take-up rate as the economy recovers. Such a propensity for training attendance to be counter-cyclical is also seen in previous cycles. With regard to contract work, the fact that contract workers, especially through outsourcing, are often seen as outside the purview of companies to invest in training and development, means that there must be a mechanism and resources to help them do so, because if their weaknesses were not tackled, they will eventually translate into weaknesses within those companies that they work and that can become our next potential Achilles heel.

I propose that the SPUR programme, which is more comprehensive than the targeted WTS, also be reviewed, enhanced and be repositioned from its recession fighting role into a booster for productivity improvement through skills

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building. This means lifting the two-year limit on the scheme. It would also require reviewing the terms of the scheme to ensure its attractiveness to companies and workers at large in an economy that has come out of recession.

So while Government policy, incentives and disincentives will be significant in sending signals and creating a more conducive environment for productivity development, the real change happens in each industry, each company and each worker. The Labour Movement understands this fully, and this is why it has initiated the Cheaper, Better, Faster drive to get workers and unions to partner the companies to enhance productivity, improve capability and increase adaptability, with an all CAN (Collars, Ages, Nationality) workforce.

We will play our role actively within the tripartite relationship, so that this national endeavour will see breakthrough outcomes and pervasive innovation as soon as possible, and to the benefit of the workers of Singapore.

Sir, we need all hands on deck, to be clear minded and determined to reach the goal of one-third improvement in productivity in the coming 10 years. Let us put our hearts and minds to it, and get it done.

Sir, I support the Budget.

The Senior Parliamentary Secretary to the Minister for the Environment and Water Resources (Dr Amy Khor Lean Suan): Sir, as they say, a picture speaks a thousand words. I would like to share with the House three cartoons which depict, in a light-hearted fashion, the three weighty areas for which REACH, the Government feedback unit, has received feedback in the last week on Budget 2010.

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Even as I am speaking, these comic strips are being uploaded on the REACH website for netizens’ viewing pleasure.

Firstly, on "Raising Productivity".

Secondly, on "Growing Globally Competitive Local Companies".

Thirdly, on "The Lack of Goodies".

By way of background, the REACH microsite has accumulated more than 34,000 page views since last Monday evening. Thus far, we have received close to 1,000 feedback inputs through the various engagement channels.

Most feedback contributors support the broad thrust of the Budget to raise productivity and grow globally competitive companies for sustainable economic growth. Not surprisingly, there are concerns among many of our contributors as to the effectiveness of some of the Budget measures announced in attaining the desired goals. I would like to highlight three such concerns, thematically mirrored by each of the three cartoons.

Firstly, Raising Productivity. I have four subpoints.

Winning Workers. During a webchat session, one REACH contributor lamented, "I am wondering where the root of our low productivity problem lies? It seems that people are working really hard these days and even harder than before. Have our efforts been fruitless? What can we as individuals do differently to improve productivity?"

Such comments demonstrate the misconception for the layman that productivity means doing more work over longer hours when, in fact, it means doing more but in the same time span or less. The lay understanding or, more correctly, misunderstanding of productivity will crush the average Singaporean worker

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already slogging away for many hours. It is thus important for the Government to win over employers, workers and the unions to promulgate the right understanding of productivity and, in particular, that higher productivity will translate into better jobs and higher wages without necessarily having to work longer hours.

Supporting SMEs. SMEs vary significantly in size and competencies. The more progressive local companies that are thinking of, or have already embarked on innovation, automation and research and development (R&D) to improve efficiency will welcome measures like the Productivity and Innovation Credit, which will hasten the pace of their productivity drive.

Nonetheless, there are some smaller firms which may find it difficult to be weaned off foreign workers because there is genuinely limited scope to automate processes or they are not aware of the technologies available, or else they are cash-constrained.

Hence, it would be useful for the National Productivity and Continuing Education Council to work with SPRING to set up a dedicated one-stop department or centre to help SMEs. There can be no one-size-fits-all solution to improving productivity.

Sector specific analysis of productivity drivers for each industry and customised solutions to improve productivity and innovation for each sector and each company needs to be devised under the facilitation of the Council and the use of the National Productivity Fund.

Tackling Training. Based on my experience at the South West Community Development Council, low-wage and especially older workers in this group face particularly severe barriers to training.

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It was also reported by Ministry of Manpower that the training adoption rates for sectors dominated by SMEs have been low. In the ubiquitous retail sector, for instance, the training adoption rate is only 5%. The major obstacles to attending training for this group include the lack of basic literacy and numeracy skills, inability to stop work for training as they are the sole breadwinners in their families, and their fear of, or resistance to, training.

Some companies may also not place priority on upgrading the skills of these low-skilled workers as they feel that the marginal productivity is less than the marginal cost of their training investment. There is also less incentive to send these workers for training as they tend to be casual or contract workers who may not be with the firm for long. Put simply, they will not get the most bang for the buck from training these older and low-skilled workers.

The WTS and enhanced WIS would go some way in overcoming these training challenges. However, to make the schemes more effective in motivating the workers to attend training, the cash component of the WIS, which now stands at one part cash to 2.5 parts CPF, should be increased. The frequency of the payouts which is currently half yearly should also be increased, say, to every quarter. This would make the WIS more attractive to the low-wage worker who often faces cash flow problems.

Increasing the qualifying income ceiling to $1,700 per month for WIS would benefit more low-wage workers. Nonetheless, the qualifying criteria could be further relaxed such as by not taking into account overtime work, which is irregular, so that more workers would benefit, and they are not inadvertently penalised for being industrious. Moreover, this income ceiling should be reviewed periodically to keep pace with wage increases and inflation.

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The WTS could also be tweaked to make it easier for casual and contract workers to go for skills upgrading, such as by directly offering them absentee payroll or course fee subsidies, and making the training courses more accessible to them by customising the training hours and course contents to suit their needs.

Reducing Reliance on Foreign Workers. The move to raise foreign workers’ levies, even if in a calibrated manner, have raised the strongest reactions among Singaporeans. On one hand, there are Singaporean workers who feel that increasing the levies without changing the dependency ratio will not sufficiently deter employers from hiring foreigners. They want more to be done. On the other hand, unhappy employers, especially those from sectors who rely heavily on foreign workers, say that this could lead to cost increases as they have difficulty replacing the foreign workers with locals who shun the physically demanding jobs and that there is very little scope for productivity improvements to offset the cost increase.

Already, there are predictions from some quarters – such as the food and beverages, construction and even nursing homes – that ultimately such cost increases would be passed on to consumers. The Government should closely monitor developments in this area. It needs to help companies, especially those which are too small to benefit from investments to boost productivity on their own, to see how they can utilise the slew of measures announced in the Budget to get onto the productivity bandwagon and remain viable.

For sectors that provide vital social support such as step down heath care, the Government may have to extend subsidies to the sector to keep fees affordable, especially for the low-income,

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if their reliance on foreign workers cannot be sufficiently offset by productivity improvements.

Additionally, for the change in foreign worker levies to achieve its goal of inducing firm specific productivity measures and reducing reliance on foreign workers to be effective, it must be complemented by tightening of the loopholes to prevent the phenomena of phantom employees, kickbacks to employers and the exploitation of workers by workforce agencies and even employers.

Many of this year’s Budget measures to help SMEs grow and become globally competitive require the Government to play an active role such as: deciding which private sector projects it will co-invest in, determining the quantum of financial support for different skills sets in the CET, identifying companies and sectors with the most potential for productivity gains and deciding if the expenditures incurred qualify for the productivity and innovation credit.

These are clearly no easy tasks. The civil servants administering them would thus have to sharpen their business skills, gain appropriate industry knowledge and a good appreciation of how the private sector works as well as adopt an open and flexible mindset.

Whilst the tax incentives accorded to mergers and acquisitions are welcome, it would be even more helpful if the Government can also act as an intermediary and link up SMEs that have potential synergies with each other.

Although it might be difficult to form a clear picture of the sector because of the disparate nature of such entities, the Government should consider creating platforms – working with ASME or private investment banks, for example, for suitable SMEs to be "match-made". Unlike

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MNCs or listed companies, smaller SMEs have limited resources to seek out companies for merger. Furthermore, many entrepreneurs and SME bosses are reluctant to cede even partial control of their companies.

Singaporeans generally welcome the revised property tax structure and higher income tax reliefs for those caring for the elderly and handicapped. However, many tax paying individuals, especially those from the middle income, are disappointed that the 20% rebate on personal income tax, capped at $2,000, has been removed. We are only coming out of a recession which has seen the real incomes of Singaporeans decline. It would have been helpful if the income tax rebate was extended for another year.

As we embark on a concerted productivity and innovation drive, some companies would inadvertently fall by the wayside leading to the probability of re-structuring job losses. It would be helpful especially to the PMETs, who lose their jobs, if they could be provided with absentee payroll or course fee subsidies for training for a fixed period of time under the enhanced CET, much like the SPUR programme, whilst they are looking for another job.

Budget 2010 is not about instant fixes or short-term gratification – hongbaos , goodies or freebies. We needed some of that to tide us through the difficulties of 2009. Now that the economy has begun its climb again we need to chart a different course, one that brings sustainable, long term and real benefits for all.

The road ahead would no doubt be bumpy and the concerted efforts and commitment of all stakeholders – the Government, businesses, unions and workers – is vital to attaining this goal.

But if we succeed, and succeed we must,

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the dream of the lady in this final comic strip of being a model employee, super-mum and another Kim Yu Na with the perfect body proportions of a "hot bod babe" – all at the same time – would become reality.

Indeed, better jobs, better wages and better quality of life could make us even more productive both at work and at home or, more specifically, in the bedroom as well!

Sir, I support the Budget.

5.31 pm

Mr Michael Palmer (Pasir Ris-Punggol): Mr Deputy Speaker, Sir, thank you for giving me the opportunity to speak on the Budget Statement.

This year's Budget is a forward looking one. It complements the recommendations of the Economic Strategies Committee (ESC) which has identified a new course enabling Singapore to grow and sustain growth for the next 5-10 years. In short, this entails improving the skills, innovation and productivity of our workforce and companies. Consequently, the recommendation is also to reduce our reliance on our foreign workforce. I am convinced that in the long run, these recommendations bode well for Singapore and they must be adopted if we have had to have sustained growth.

As recognised by the ESC, our local companies have a 5-10 year window of opportunity to create a strong presence in Asia. As the other countries in Asia catch up, they will compete with us in the same arena. One of the best ways to sustain our growth is to raise our skill levels and productivity levels. What came as a surprise when I read the ESC report was how far down the rankings we were placed in respect of our average levels of productivity in each of the major sectors of our economy. Our productivity in the

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manufacturing and services sectors are only 55-65% of those in the United States and Japan. In the retail sector, the picture is even less than encouraging, in that we are only about 33% as productive when compared to the United States. In the construction sector, this holds true when compared to Japan.

Just like the hon. Member, Dr Ahmad Magad, I recall that private productivity campaigns were a norm as we strove to increase our productivity. Most of us would remember the National Productivity Board (NPB) set up in 1972. Teamy, the productivity bee was launched in the 1980s. Productivity in all our economic sectors was the name of the game. The NPB followed a total productivity approach which emphasised productivity measurement, product quality, a flexible wage system, worker training and assistance to small and medium-sized enterprises.

The NPB offered management guidance services to SMEs to assist them in improving their productivity and efficiency as well as referring companies to private management consultancy services available in Singapore. Increasing individual and company productivity at all levels was a Government priority, given Singapore's full employment picture and relatively high wages. Greater productivity than our neighbours and competitors was viewed by the Government as a necessity as well as one of Singapore's major advantages.

But in the last 10-15 years, that productivity message and drives seem to have faded away. Was this an intentional strategy or did we drop the ball somewhere along the way? And if it was part of the strategy, were we content to see our productivity levels in the retail and construction sectors remain at 33% of the world's leaders? It is timely that the

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National Productivity and Continuing Education Council be formed with all the measures that would be implemented to increase our productivity. I fully support these measures.

In light of the 5-10 year horizon envisaged for the growth of our workers' skill levels and productivity, however, I am concerned with the rapid increase in the levies imposed on the hiring of foreign workers and the effect it will have on our local companies, especially our SMEs. Already media reports indicate that some companies feel that they will be forced to relocate at least part of their operations overseas if they are unable to cope with labour and staffing challenges posed by the rapid change in policy. The hon. Members, Mr Teo Siong Seng and Mr Ong Ah Heng, have highlighted the potential effect on costs and pricing, which I echo.

Our GDP grew an average of 8% per year during the period 2004-2007. During that period, our workforce and, in particular, our foreign workforce grew rapidly as well. If we look at the numbers, in 2004, our total employed workforce was about 2.238 million, 27.1% of these workers, or about 606,000, were foreign workers. In 2007, our employed workforce grew to 2.631 million and about 31.5%, or 828,000, were foreign workers. But the growth over the next two years is even more striking. In 2009, our employed workforce grew to 2.905 million, which is an increase of 274,000 from 2007. But our foreign workforce grew to 1.036 million, or 35.7% of our total employed workforce. This means that out of 274,000 increase in total employed workforce between 2007 and 2009, foreign workers made up of about 207,000 or approximately 75% of the increase. Unfortunately, I was not able to obtain a breakdown of these figures by sectors of our economy. But if one looks at it in overall terms, our reliance on foreign workers over the last five years, from 2004-2009, has increased by almost

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a-third. In real numbers, we had 430,500 more foreign workers in Singapore in 2009 than we did in 2004. Putting that in perspective, that is a population of about two 5-MP GRCs. If we view these figures in terms of our local industry, the reliance on foreign workers in many of our major sectors is clear. Construction, manufacturing, marine and service sectors rely heavily on foreign workers. We can see this with our own eyes. Virtually every cafe, hawker centre or shop that we go to, has at least one, if not more foreign workers on their staff. In our factories, shipyards and on construction sites, foreign workers make up a large part of our workforce. At the Istana tea party on Sunday evening, I was hard pressed to find a local waiter or waitress.

Since 2004, we have gone down the road of an increasing reliance on foreign workers to do the tough jobs that Singaporeans cannot do and would not do. To find our way back up that road will take time, perhaps 5-10 years. I then wonder why the foreign worker levies are being increased so rapidly over a period of three years, beginning almost immediately. The rate of rise in foreign worker levies does not correspond with the rate at which an increase in productivity and skills is envisaged to be achieved. If indeed an increase in productivity and skills is meant to offset a lowering in the number of foreign workers, would it not be appropriate to gradually raise the foreign worker levies over a corresponding period? This would allow time for the measures and schemes introduced to raise skill and productivity levels to have an effect on the local workforce.

Another issue that I would like to raise is the approach taken in relation to lower-skilled foreign workers versus higher-skilled foreign workers. I will stand corrected but I gathered from the Budget Statement that the objective was to reduce the number of foreign workers, especially those with lower skills. In other

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words, of the foreign workers that we do retain in Singapore, we would prefer to keep those with higher skill levels. If that is indeed the case, I am having some difficulty understanding the recent announcement concerning the proposed increases in foreign worker levies. If we look at the basic tier and the second tier for skilled work permit holders in the manufacturing sector, the ultimate increase in levies would be 33% and 100% respectively, this – compared with 25% and 43% increase in the corresponding tiers for unskilled work permit holders in the same sector. For 'S' pass workers which are defined as mid-level skilled workers, such as technicians, the increase by July 2012 will be 200% for the basic tier and 400% for the second tier. I would ask the Minister to clarify this.

Sir, in this final part of my speech, I would ask the Government to perhaps consider another issue in our local workforce that has nothing to do with skill level or productivity of a Singaporean worker. Instead, it has to do with his or her mindset – the "won't do" or "don't do" mindset. Time and again, I meet owners and managers of our local companies, particularly those in labour-intensive sectors, such as the manufacturing, construction, marine, retail and service sectors, their common refrain is not that they do not want to hire Singaporean workers. Their difficulty is finding Singaporean workers who want to do the jobs and work the hours that are required for the job.

Shortly after the Budget Statement, I received an email from an HR manager of a local food and beverage chain of restaurants. She has asked to keep her company name out of my speech – I will respect that. But I cite it only because I feel it provides some insight into the issues which our local companies face in hiring Singapore workers and captures feedback that I have heard from many in

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the service sector. F&B is a tough industry, she says, and today, many F&B establishments are looking elsewhere to bring in the people they need in support of their business operations. We are faced with difficulties in recruiting locals. There are not many locals out there who are keen to work on weekends, public holidays and F&B operation hours. And above all, not many are able to put their pride aside as a service provider to wait on people. We have worked with the CDCs, e2i and even SCORE through the Yellow Ribbon projects and we have spoken to MOM and SPRING Singapore with regards to our recruitment needs. Efforts have been put in but we still cannot find our numbers. With the opening of the two IRs, many F&B establishments like ourselves are losing people. With the increase in the foreign worker levies, be it for work permit or "S" pass holders, companies like ourselves will suffer due to the shortage of manpower and the increase in our labour cost.

Sir, as we seek to raise the overall skill and productivity levels of our local workforce, I feel that we also need to try to bring about change in their mindset. This requires more soft selling. Is it yet another campaign? The answer – I do not know. I do know however, that in order to remain competitive, better skills and higher productivity are just part of the equation. In addition, we must also have the right mindset to be flexible, adaptable and willing to do tough jobs. I hope that in planning continuing education programmes, the new National Productivity and Continuing Education Council will also pay attention to this issue. For I think that, in the long run, mental resilience will be just as important as hard skills.

Mr Deputy Speaker, Sir, with that, I declare my support for the Budget Statement.

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5.42 pm

Mrs Mildred Tan (Nominated Member): Mr Deputy Speaker, Sir, thank you for allowing me to speak.

Like the ESC report, I think this Budget will enable us to stay competitive and propel us to become an advanced economy. It will bring us far but it is important to consider how far and how long this journey will take.

In reality, we are living in a new world order that requires multi-dimensional balancing act. How do we become more resilient to shocks that remain flexible enough to grasp new opportunities? How do we maintain proven business perspectives while accommodating very different demands of emerging markets? How do we deepen our local know-how while delivering global economies of scale?

The proposition, therefore, is how to compete in a new business environment at a time when the rise of companies and where emerging markets have changed the game and the outlook for businesses. Given this new world order, I would like to offer four perspectives.

Developing our local enterprises to be global players require us to embrace diversity. We need to enable our local companies to grow regionally and internationally and I therefore welcome the incentives for the small and medium-sized enterprises to grow their businesses outside of Singapore. Our domestic market is too small. We need to think about how to strengthen our SMEs regionally and beyond, and to evolve our companies to be relevant global players. It is therefore imperative as companies deepen and broaden their presence in the international markets for management teams to be also culturally diverse. Therefore, in this regard, I believe more effort and attention should be made by

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the Government to help companies embrace diversity and inclusiveness in the workplace, both at the management as well as the workers' level. Quite aside from the social and quality of life gains from a diverse workplace, promoting effective communication will enhance productivity and ensure higher workplace safety. It will create teams to spur creativity and innovation.

Secondly, productivity and innovation need to capture the hearts and minds of our workforce. The Government's investment in training, reskilling and continuous education and learning will not have a competitive edge it seeks if it does not capture the hearts and minds of our workforce and the people do not bind into this proposition.

Productivity can be defined in so many ways and takes on different interpretations. But does the word "productivity" captures the imagination and envision of people to what the future is? I believe our younger Singaporeans, the Gen Y, seeks aspirations to innovate, to be agile and to make a difference. We need to identify an impetus or driver of change to galvanise and harness the collective energy to change the mindsets of our people to be more agile and mobile. This is a strategic imperative.

Whilst companies must embrace productivity and innovation transformation from a strategic perspective, companies can also be helped at the tactical or operational level to improve its efficiency and effectiveness at the ground level.

These changes must go hand in hand with training and skills development.

Sir, I am a partner at Ernst & Young and therefore some of the following comments are from the business advisory and tax domains. Fundamentally, companies may need to have a deeper look at how they do things and redesign jobs, and

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organisations to help them leverage workers' skills and use them more effectively. One concrete example is workers today are offered many different training programmes to help them develop. However, what happens at the workplace? Often times, when they return to their jobs, they are still doing the same things at the same pay, and their wages will stay more or less the same if nothing changes at the workplace? Can the Finance Minister consider increasing incentives, not just to increase productivity via process improvement but also organisation redesign initiatives at the workplace. For example, provide grants and subsidies to companies or initiators which will help process improvement and organisation redesign for increased productivity. Perhaps look at the double tax deduction or even the enhanced tax deduction for process improvement and organisation redesign expenditure, similar to the tax treatment for donations.

While I agree it is good economics to increase productivity as much as we can, it is unclear what some of the short term impact will be. Like some of the other Members of the House, I believe the increased foreign worker levy will drive business costs up in the short term, and our local companies will be less competitive as business costs goes up and there will be likely a time lag for productivity initiatives to catch up. Indeed, the Finance Minister laid out many incentives in this year's Budget. But as I go through each one of them, I wonder if there is a more comprehensive and integrated way to conceive this year's collection of incentives and benefits. Perhaps, even more importantly, I do hope we will have clear public communications to help companies understand who are eligible, when and where one can apply and how to take advantage of the different schemes.

Thirdly, to foster socially inclusive growth, can we consider developing the

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social enterprises? Sir, I think there is a great deal of desire to do more for society. However, I am surprised that we have not leveraged much on developing social enterprises. There appears little support for this, including investments in know-how and how to do so. Cooperatives are good examples of how this can be done. But aside from very successful ones such as FairPrice and Income, there appears to be few social enterprises that have succeeded to that extent.

Sir, I think we ought to ask the Finance Minister if he could support social enterprises more but, at the same time, social enterprises themselves need to do some asking. Social enterprises in the UK, for example, are active and viscerous. There are estimates. They have a combined turnover of £27 billion and contribute £8.4 billion to GDP. They have a manifesto to triple their contribution to the economy over the next 10 years. They see social enterprises as a way towards a fairer and more sustainable economy. Among the policy initiatives it calls for are tax breaks for social investment, laws to help communities buy and run their own assets and routine collection of information on social enterprise movement. In Singapore, we could learn from them too.

There are about 150 social enterprises in Singapore today and a social enterprise association where two Chairs are Members of this House. Hence, I hope they will support me in the following remarks. When we speak of inclusive and socially responsible growth, these ought to be in the forefront of our discussions. I believe Budget should be making provisions for the growth of social enterprises. This Budget sounds like it is tailor made for social enterprise with its focus on inclusive growth and allowing all Singaporeans to enjoy a better quality of

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life. So I ask social enterprises to step up to ask for what they need and the Finance Minister to support them.

Fourthly, enhancing our growth strategy for the future. Sir, I now have three additional suggestions to enhance our growth strategy and would the Finance Minister consider the following. On the productivity and innovation credit, where there is a cap of $300,000 per activity, can this be extended to $500,000 as additional tax relief allowance per activity? Alternatively, can the Minister consider allowing flexibility in the total $1.8 million over the five-year period with the six activities outlined as the spend for each activity may vary from one activity to another. Second, encourage the use of Singapore as events location and entertainment hub. Would he consider exempting withholding tax at such mega events? Thirdly, making a commitment to increase every Singaporean's understanding and responsibility to being environmentally friendly. To what extent can incentives be further enhanced to encourage companies and households to adopt green practices? We must ultimately ensure that whatever initiatives we have is sustainable in the long run. That is our responsibility to the future – a green and clean environment.

Sir, I opened my speech by speaking about the uncertainty of a new world order and the impossibility of knowing everything. At the same time, I say we need to do the best we can with the limited knowledge that we have. So, today, I would like to speak about nuclear energy. I was surprised and intrigued by the possibility of Singapore having a nuclear power plant in the long term. This is a very bold vision and the study of this should be supported. Nuclear energy is something foreign to many of us but we need to consider the long term because of global warming and the unsustainable use of fossil fuels. Fuel prices will continue

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to rise in the long run. I believe we do need to look at our energy policies.

Two things appear to put Singapore out of the nuclear map. First, when we speak of nuclear power plants, the first thing people think about is, "not in my backyard." Even more true because, in Singapore, we are so small, we do not even have a backyard, but we do have smaller, outer islands that may be far away enough. Second, radioactive waste. The timeframe that we are speaking of for such a waste to run into harmless level ranges from 10,000 to a million years. How do we deal with such waste? But we do have a hope of new technology and R&D which, in time, may neutralise radio activity. Who knows? Sir, nuclear energy is high science and alien to me. However, it warrants serious consideration and financial resources should be set aside for this study on nuclear energy – visit other countries, see what others are doing and research. In the sixties, when we first launched our search for water security, did membrane technology, reverse osmosis and the Marina Barrage seem like high science? But yet today, we are drinking water, canoeing and planning for more desalination plants. Sir, when we built our first waste water reclamation plant in the '70s, it was shut down quite quickly but not before we learnt that it was possible to recycle waste water to drinking water quality. It was just not economically feasible. But if we had not known this, had we not set aside the budget and the time to try it out, then 23 years later, we would not have had Newater plants.

Sir, the world is changing. There is much we do not know but there is even more than we can dream of. The Singapore water policies are good examples of how looking ahead and planning for a very long term has stood Singapore in good stead. It is perhaps uncharacteristic to speak of dreams in a Budget debate. That is why I would like to

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signal my support and urge our urban policymakers to dream on and to consider the policies of alternative sources of energy. Sir, I congratulate the Finance Minister for a well-considered Budget and ask that he considers some of my suggestions with the hope that it will be an even better one.

5.53 PM

The Senior Minister of State for Foreign Affairs (Mr Zainul Abidin Rasheed): Mr Deputy Speaker Sir, thank you for the opportunity to speak on Budget Statement 2010 by Finance Minister Tharman Shanmugaratnam.

Sir, although it is two days after Chap Goh Mei but in the light of the Budget sentiment, allow me to first say, Xin Nian Kuai Le, Gong Xi Fa Cai, Shen Ti Shen Kang . For the benefit of the Malay and Tamil interpreters, it just means Happy New Year, lots of prosperity and good health.

Sir, I support the three-prong approach taken by our Minister for Finance to bring Singapore forward, namely, raising productivity, growing globally competitive companies and including all Singaporeans in growth.

Allow me to dwell on the first, plus touching briefly on the other two, although I realise that to speak on productivity can be quite tricky, especially when one has to also prove productive in this short time available. As one Facebook friend said, "Productivity is about not doing the unnecessary."

Nevertheless, allow me to, first, recall the days when the former National Productivity Board once launched a campaign to increase the productivity of Singapore’s workforce. The NPB now has evolved under a more glamorous name called SPRING. The campaign drew a lot of flak, especially from the EDB. I understand EDB’s predicament, especially

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when they were promoting Singapore very successfully as an investment destination, promising the best workforce available in Singapore. I was then Editor of Berita Harian and I served under the NPB’s Media/PR Committee, under the chairmanship of my friend Mr Toh Thian Ser, a Senior Editor of the Business Times then. I remember the hard tussle between the Committee and EDB. Coincidentally, the former Chairman of EDB, Mr Philip Yeo, is now Chairman of SPRING and Special Adviser for Economic Development, Prime Minister's Office. Finally, so I was told, the campaign for greater productivity among Singapore workforce prevailed, as there was indeed a serious problem with labour productivity then that needs tackling. Apparently, the campaign was inspired by none other than Minister Mentor himself, our PM then.

I am glad, Sir, our Government takes a transparent and open approach towards raising labour productivity. But that is not to say that we have nothing to be proud of when it came to productivity. In fact, this is one area where many foreign countries look to us for help. We helped Botswana set up its National Productivity Centre, beginning 1993. The Singapore Cooperation Enterprise is now helping Rwanda establish a Workforce Development Authority since 2007, followed by the implementation of related training projects. Under the Singapore Cooperation Programme run by our MFA, we do programmes on e-government which increases efficiency and productivity. Singapore is indeed very much sought after by our friends overseas when it came to productivity, e-government and good governance.

Well, glory of the past, however, will not help us meet competition today. The challenges facing the workforce today are growing. We are, after all, as good as our performance on our last job.

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As mentioned by the GPC Chair for Finance and MTI, Ms Jessica Tan and hon. Member Lim Eng Hwa, it is about going back to basics. We still need to define clearly what we mean and expect of better productivity. We can show what we mean through sharing of best practices as suggested by Ms Jessica Tan. As it takes both hands to clap, the employers and employees must act in sync to ensure success of our efforts to raise productivity. Government’s helping hand, in terms of resources for training and retraining and policy changes, will certainly come in handy.

Some of the questions I am raising today reflect some of the concerns still playing in people's minds. I posed this issue to my Facebook (FB) friends and I obtained some reactions worth sharing. One FB friend asked whether Government will explain how productivity would translate into higher wages for employees, as companies’ paramount interest is to make the most profit possible and we do not want workers to feel short-changed. Would the increase in foreign worker levy be passed back to consumers, and whether the higher levy could backfire, eg, labour cost goes up but yet we still could not get locals to fill the jobs usually done by foreign workers, or worse productivity remains low?

One FB friend said that productivity can be attained successfully with constant validation of the various processes that exist within any organisation or work environment.

Deployment, cost efficiency and wise investment on tools or expertise are some examples, but constant policing of process flow by credible teams must be in place to ensure that we do not lag behind in our fast growing and expanding industrial environment. Sometimes, some process change might look good during implementation, but becoming obsolete or, worse, causing bottlenecks, making

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people lose faith in efforts at raising productivity.

We must also recognise that different sectors would require different approaches to productivity. For example, training need not be the answer to every sector, as it will also imply higher churn factor and, with reduced available resources, productivity could decrease. In the service sector, human factor is critical, where higher senseless efficiency could lower standard of service. Bottomline, productivity is more than just about tools and measures of cold KPIs. We need to target on positive work culture and a greater sense of pride in work satisfaction. That, in short, will bring about better productivity.

Allow me, Sir, now to continue in Bahasa.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, it is right for the Minister for Finance, Mr Tharman Shanmugaratnam, to pay special attention to productivity. This is the hallmark for the economy which is facing competitiveness in globalisation. However, the definition of productivity should be clear so that there is no sector, especially the employers, who will take advantage of it and to take advantage of the Government's efforts to gain their profits. To ensure this step is successful, there should be cooperation and approach in unity because the effort to increase productivity is our common effort. We must convince that these measures will be enjoyed together and especially it must be interpreted with the increase in skills and wages.

The measures to increase productivity by using new methods and the process and the KPIs should be embedded with the good positive work and pride to the workers. This is to guarantee the increase in productivity continuously. At the same

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time, I also accept the Government's directions to improve the potential of our local companies in the region. This is important when we see new opportunities which are emerging in China, India, Middle East and Africa. I found the Malay workers in the Middle East very encouraging. This is one of the best opportunities for us in this new area.

Finally, the three-prong Government measure is to ensure that every citizen will continue to contribute towards the development of Singapore to ensure that every Singaporean will be given the best opportunity to enjoy quality of life which is better and this should be accepted by all. For the Singapore multi-racial society, there should not be anyone who felt he is left behind. The Malay community should also play its role to improve its productivity and to find new opportunities and benefit from it and continue to contribute towards to the development of Singapore equitably and in a united way.

*Cols. 2591-2592.

6.04 pm

The Minister of State for Defence (Assoc. Prof. Koo Tsai Kee): Mr Deputy Speaker, first in Chinese and then in English.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Deputy Speaker, Sir, last year was the year of the cow. We all know that the cow is a slow-moving animal. This year is the year of the Tiger. The tiger is a ferocious beast, one of the most feared animals in the jungle. With the two wings of productivity provided by the Finance Minister, the "flying tiger" will certainly move very fast. This year is going to awe-inspiring!

Why am I speaking in Chinese? This is because I want to speak on a problem that is very common among the Chinese people – that is, gambling. Many people are saying that in this year's Budget, there is no hong bao , but only shu bao (school

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bag). Yes, indeed, when you carry your school bag and go to school, you do not see any immediate benefit. I told the people that the hong bao contains some money, but once you spent the money, there is nothing left for you. But a shubao contains a lot of books. There is a Chinese saying, " shu zhong zi you huang jin wu " – meaning "there is a house full of gold in the books". So, the more you study, the more you learn, the more you learn, the smarter you are, and your house will get bigger and bigger. You will be so much richer!

The Chinese people like to gamble. Among the four most common vices in Chinese, chi, he, piao, du (eating, drinking, womanising, gambling), gambling seems to be the most prevalent. From the Chinese history, we read a lot of stories of people selling their houses, and even their wives and children to gamble. Singapore is not China, but even then, the Singaporean Chinese are still prone to gambling. Notwithstanding the saying that out of ten who gamble, nine will lose, many people still believe that they can be the number tenth and emerge the winner in gambling. They say, "If you do not go to the tiger's den, how could you catch the tiger cub?" I think we should not toss ourselves at the tiger to feed it.

The Chinese character for gambling, " du " follows the radical of " bei " (sea-shell) which was the currency in ancient China. Some say the vertical stroke of the character " gong " (work) does not penetrate the horizontal stroke above it. Even if the vertical stroke penetrates the horizontal stroke, it becomes the character " tu " (mud or earth). In other words, no matter how hard you work, you will never earn big money. However, if you add a character " li " to the side, it becomes the character " gong ", meaning credit, reward or status. So, you must

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work hard, work smart, and earn the pot of gold at the end of the rainbow.

*Cols. 2593-2594.

( In English ): Sir, I want to speak in English now because this topic is a Singapore topic. I want to talk about productivity.

I am very glad to hear from Mr Tharman Shanmugaratnam that Deputy Prime Minister, Mr Teo Chee Hean, would be chairing the National Productivity and Continuing Education Council. Productivity is the only way to go if we want to do more with less. And I say that the Deputy Prime Minister, Mr Teo, is a very suitable candidate to chair this Council, not because he is my boss but because of his long years in the SAF and the MINDEF. Why do I say this? Because MINDEF and SAF are very special organisations – we have no foreign talent and foreign workers. We cannot employ a foreign talent and say, "be the Chief of Army". We cannot. We are not a mercenary army. We are the people's defence force, we are the Singapore Armed Forces. We cannot employ a foreigner to become an infantry rifleman. Every rifleman is a Singapore citizen. Every Chief of Army, every Chief of Navy, is a home-bred, true-blue, citizen. Therefore, faced with this constraint, we have to think of new ways to solve the problem. In fact, we have a bigger challenge today, which is to deliver a security umbrella to meet new security challenges.

In the past, it was just perhaps one or two challenges, but today, the SAF has to meet a range of security challenges, from fighting a hot war to maybe low-intensity conflict, to providing security, even at national events like National Day Parades, to fighting piracy. Maritime security is also our problem. Therefore, how do we do more with fewer and fewer soldiers, fewer and fewer airmen, fewer and fewer sailors? Every tiger is getting smaller, every cow is getting smaller. Never mind

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the dragon. So, faced with these challenges, the SAF has long practised productivity, and productivity focuses the mind. In fact, the operational units of MINDEF and SAF have a zero manpower cap for quite some time. And if we want to buy new things to engineer new processes, we must actually find the money by cutting down on our establishment. So, we must cut manpower. Instead of employing more people, we have to take away manpower and then the savings could be used to fund new programmes. Today, we have the 3rd Generation SAF with fewer soldiers, fewer sailors, fewer airmen, that can deliver more responsive firepower, a range of firepower that is more precise that will hit on time, every time.

I give Members three examples. First, for those Members in the artillery, and for those ladies who have not been there, perhaps we can have a tour of the artillery units. We have this home-design and home-manufactured artillery called the Primus. When Mr Michael Palmer was with me in New Zealand, he saw the firepower of the Primus. In the past, we had Howitzers – eight people to a Howitzer. Today, we operate the Primus with only four people. Four people could deliver more firepower. The Primus is actually a 155 mm gun on a tank that can move. So, more firepower, more responsive.

In the Navy, we have six frigates – one of our most modern and most capable platforms in the SAF, certainly in the Navy. They fight three-dimensional warfare – in the air, sea surface and under the sea. The frigate only employs 90 people – actually, 71 Navy crewmen and 19 helicopter detachment. If we compare the same capability, same class of frigate, let us say the La Fayette type, they employ between 150 and 180 people. I was in New Zealand recently and the New Zealand Defence Minister asked

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me – they also have frigates and naval helicopters – "What is your crew size?" I said, "Without helicopter staff, it is 71." He was quite surprised and said, "How do you do it?" He was impressed and the Navy staff was quite keen to learn more.

Sir, if Members think that we only spend money on platforms and, therefore, reduce the manpower, then they are wrong. I give Members another example to illustrate my final point, ie, the commandos. The commandos are the elite forces and, in that sense, they are human-centric. They cannot carry a lot of platforms when they run, when they are airborne. They can only carry maybe an assault weapon and a few other items. But, today, we have downsized the commando unit by 25%, and yet they deliver more responsive firepower at the right time. How do they do it? First, we train them in their core skills to be a commando. Secondly, we cross-train them so that each commando knows at least one more task, one more skill, and then we network them through connectivity. In other words, in the past, they depended on their own organic firepower. Today, they draw firepower from the other teams. And through strong connectivity, they connect their firepower up to the SAF level, so that they draw on the entire SAF's strike force firepower. So, less for more. This is what we have achieved in the SAF, and I think this is something that the other organisations can learn.

Of course, I appreciate that not every organisation have this sort of constraint. They should be allowed to employ more people – some Singaporeans, maybe some foreigners. A judicious mix of some foreigners and some Singaporeans is the right solution, because Singaporeans are just too few in number to grow in every sector. But I want to distinguish between system productivity and individual productivity. When system productivity

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increases, everybody is better off and, therefore, everybody's income should grow. But sometimes, when system productivity does not go up, individual productivity can go up, but the salary may not see sharp increases.

My favourite example is the Subway sandwich maker. The Subway sandwich maker's system is the same whether it is in New York, London, Sydney or Singapore. I was in New Zealand recently. I was feeling hungry. So I went to the nearest Subway outlet and I watched the counter staff – I was in a long queue – and he followed the same process. Those Members who have been there would know. He asks you what kind of bread you want, then he toasts the bread, what kind of salad you want, what kind of sauce you want and all that. It took him quite a while. When it came to my turn, I ordered a foot-long chicken sandwich that cost me NZ$10.90. I take Subway sandwiches regularly at Jurong Point. I see a team of Singapore Subway workers there, very fast, productivity even higher than this New Zealand guy. It is the same process but faster. But I think this New Zealand guy gets a higher pay than the Singapore worker. But the Singapore worker's productivity is higher. So, the question is, why is the Singapore Subway worker, with higher productivity, doing the same thing, but not getting more pay? My answer is because the system productivity is low, because the people buying the Subway sandwiches cannot afford to pay him more. So, by raising the system productivity, this guy, whose productivity is quite high, will not be penalised.

In many areas, for example, the individual productivity is already very high. He or she is waiting for the rest of us to upgrade so that he or she can deserve the right salary.