EXEMPTED BUSINESS

EXEMPTED BUSINESS:

(Motion): 6.08 pm

Resolved,

That the debate on the Budget Statement be proceeded with beyond 7.00 pm and the

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proceedings thereon be exempted at this day's sitting from the provisions of Standing Order No. 91(3). – [Mr Mah Bow Tan].

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ANNUAL BUDGET STATEMENT: Debate resumed.

Mr Zaqy Mohamad: Mr Deputy Speaker, Sir, the Budget presented is a fitting response to the current economic crisis. The Budget is a generous package and there are approaches and thinking that we can refine, because the downturn also provides many opportunities to make our economy, our business culture and our people stronger and relevant in this global economy.

Now, looking at this year's Budget, some aspects of it seem to rely on the private sector's goodwill for the "last mile". Over the past two years, I noticed how the Government had limited control over the market forces because of our globalised market and pro-business economic policies. So, to some extent, I do agree with Mr Liang Eng Hwa's speech that perhaps the Government has leaned too much towards a pro-market model.

We faced issues such as inflation as a result of high oil, commodity and property prices due to market forces. Many of these factors were influenced by the market. Yet, many of the measures, such as bank bridging loans, rebates on property tax, jobs credit, crucial to the success of the package, are today dependent on the market and private sector again.

I hope that we are not asking for too much to get the private sector to spare social capital in these tough times, especially when they are struggling to stay afloat. On the extreme end, what safeguards do we have, if our companies behave like those in the US where companies on the government bailout

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plans gave out exorbitant bonuses, travel on private jets and go on luxurious retreats rather than pass on these funds back to their employees and economy.

There are also leakages, given Singapore's globalised economy. If the Government pump priming is not done right, being heavily reliant on MNCs and the business sector, we could well have a situation that companies' cash savings could be transferred back to headquarters to balance the global books. I think the Government needs to figure out a way to deal with market forces and commercial decisions and not use these as convenient reasons should things go against the social compact.

While the package is generous, I fear that benefits of the Resilience Package, designed to help businesses in order to save jobs and reduce business costs, may not filter down to the end-businesses and end-employees because of the assumption that the private sector will deliver that "last mile" of the journey. Perhaps, in part, through its holding companies and investment arms, the Government can and should lead the way through its holdings in the GLCs.

The Government-link tag has served our companies well, to garner customer confidence when dealing in business, given the backing of Government and the standing of its reserves. I believe that the Government-link tag should also reflect the goodwill and social capital when the people need it most, especially in leading the way to strengthen our social compact. To me, it was disappointing when DBS was one of the first, when it came to retrenchments, paving the way for other commercial banks to follow suit.

The Government's policies towards the GLCs and investment houses should not just be focused on investment

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outcome alone, but can play a part in leading the way to strengthen the social compact between the Government and the people. As a shareholder in these companies, I hope that they can influence the business environment through their partnerships, suppliers and customer base to be fair and socially responsible during these times.

The subsidies and handouts given in the Resilience Package for enterprises are reflective of the cost-driven culture of our local environment. This culture needs to change if we are to continue to lead the business arena in the region. I think that this crisis will lead to greater market consolidation, and many companies will have to reinvent themselves beyond seeking cheap funding, buying at the lowest cost and relying on Government subsidies to stay afloat.

Though not featured as much as cost-driven measures, the Budget also provides ample incentives through R&D and innovation tax measures, as well as training, to help businesses reinvent themselves. But the Government needs to do more to promote a revolution from a cost-driven, kiasu business culture to one that promotes innovation, takes a strategic view on growth and one that values talent rather than cheap labour. I believe that it is time to reverse this cost-driven business culture. The easy access to cheap labour has made our business environment less competitive as many companies sacrifice productivity and innovation for low-cost manpower.

This business culture has also driven the Government's efforts to make the economy more competitive simply based on price – where the reduction of GST, corporate taxes, tax rebates, controlling supply and demand of property become pillars of many of our Government measures in recent times. It is certainly disheartening when businesses predomi-

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nantly look at the bottomline, and do little to drive topline measures in productivity, even in these times. Compared to cost-driven policies, there is a limited number of schemes designed to help on the demand side of the market to help companies top an achievement.

Till now, despite the Budget measures provided, there are some companies clamouring for cuts in GST and more. Having the Government keep subsidising business costs and allowing foreign labour will not help innovation, because innovation is usually a question of necessity. If we take this path of favouring too many cost-driven economic measures, we will be no different from the failing financial systems before us and end up subsidising businesses with poor business models.

For example, in the current culture, we substitute manpower in the services sector with cheap foreign labour. We rely on the tried-and-tested processes of the lowest cost, rather than innovate and lead the regional or global market. We need innovative thinking companies who will seek ways to make jobs more productive and, therefore, see the value that can be derived from better educated, better trained workers. Companies who also recognise that investment in equipment and training will help workers achieve more in terms of productive innovation and, in turn, justify for better salaries.

I am aware that NTUC has been preaching this for many years, but I do not think that we have been successful in shaping the industry and economy in a big way. The sentiment on the ground, sometimes, is that the Government promotes industry development, hampers risk-taking and new approach industry, as it seems that Government agencies tend to pick out only clear cut winners to help grow and innovate. I think we need to do

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more to help companies reinvent themselves in a big way, not just their business models, but their business mindsets.

With the Jobs Credit Scheme in place, together with Workfare, the way I look at it is that we have created some form of job protectionism that favours the local Singaporeans and PRs.

I am not advocating a hire Singaporean-only policy nor reduce foreign talent policy. But I do believe that protectionism in some form during these difficult times should not necessarily be such a bad word.

Let us be innovative and work out ways to make our talents more attractive while keeping an open economy for foreign talents that we need. We should have more schemes to level the playing field for our workers, in a way where they are also accepted based on their qualifications and certifications and not just view it as a cost factor.

Many parents in their 30s and 40s I spoke to have expressed concerns for the future of their children when they grow up or graduate. They do not feel that their children have a secure future in Singapore, when they are witnessing many mid-tier and management jobs being held by foreign talents.

So, has this Budget helped our youths see a better future in Singapore? I think we can do better. I think our youths, generation Y, Z and beyond, can prove their value if given the chance. Every generation, so far from independence until now, has proven their resilience in the face of adversity, and let us do more to give them more opportunities and hope to sink their roots here in Singapore.

Our universities, polytechnics and ITE facilities produce some of the best trained graduates in the region, if not the world. It will be sad if companies think that there is something wrong in our education

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system that we need to rely more on foreign talents.

Today, the private sector undertakes many essential services, such as housing loans and the supply of utilities. Thus, there are many instances where goodwill in difficult times will not be within Government control. For example, HDB flat owners on commercial housing loans are not being given as much leeway as those on HDB loans. For those on HDB loans, HDB exercises flexibility to help extend or defer payments for lessees affected by retrenchments or other downturn impacts. However, I have personally heard from residents serviced by commercial lenders that the moment they are two-three months in arrears, they would face legal letters and their loans are compounded with additional costs as a result of legal action.

In addition, I am told some are advised to sell their homes or face legal action to repossess their flat, although they are just three-six months in arrears. They are then advised to ask HDB to grant a rental flat if they have no place to stay, a convenient way to pass the problem back to the Government. So, the Government needs to look at how we can provide greater flexibility when it comes to such privatised arrangements, especially those concerning housing, education and healthcare. For such situations, the Government should consider issuing guidelines for fairer and more flexible actions against arrears. The guidelines should ensure that advice and recourse should be given responsibly, and not one for easy convenience of the private entity.

I am also seeing a new class of residents seeking help, but with little solution for their problems. These are from the middle-income bracket who face a reduction in total household income. This situation exists when one of the income earners is retrenched and/or when both income earners see their pay reduced

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due to loss in commissions or pay cuts. Some could have previously been earning about $4,000-$5,000 a month, but are now earning $2,000-$3,000 a month. This means a financial gap between meeting their monthly commitments, and especially those supporting parents and children. I believe that more flexibility and support need to be given to this group.

Mr Deputy Speaker, may I continue in Malay, please?

( In Malay ): _[For vernacular speech, please refer to Appendix A.]_Even during this economic downturn, social assistance must continue as the poor and needy are the most affected. Hence, we must ensure there are sufficient resources for our self-help groups.

I am happy to see many measures within this Budget aimed at helping affected families. However, I am worried that the Malay/Muslim community will be more affected this time based on their social economic profile. Generally, many in the Malay/Muslim community are in the low-income group. And due to their low education, many are vulnerable to the risk of retrenchments.

Also, some statistics also raise some concerns. Many families are dependent on a sole breadwinner because statistically many women are also not economically active. This is worrying because in the blink of an eye, many families will lose their source of income. This situation may affect their children's education and the stability of the family unit due to the economic downturn.

I hope the Government will closely monitor these at-risk groups as the Malay/Muslim community has a high number of young people in this category. Maybe it is good to examine this situation. Also, I hope that the socio-economic trend that I mentioned earlier, that is the dependency on the sole breadwinner, can be changed, especially

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among the low income that usually have larger families.

I feel that more focus is needed to deal with that trend and the Malay/Muslim community needs all available resources to overcome those problems. Possibly, during this crisis, we will see reductions in terms of volunteers and donations to Mendaki and Malay/Muslim bodies that are doing important initiatives. Hence, I hope that the Government will be able to provide more resources for them in addition to introducing more national programmes, especially in CDCs, FSCs and VWOs under NCSS, to help these families-at-risk.

*Cols. 1615-1616.

( In English ): Each day, we read interviews and reports from the Government and the media that the economy is bleak and could get worse to the point that sometimes I take refuge by reading the sports and entertainment pages in the papers.

The reality is that companies and people take cue from the signals that the Government sends. It is right for the Government to feed the right statistics and news to the people. But putting too much emphasis on the cloudy overcast feeds doubt and may cause unnecessary freezes on spending, hiring and salary adjustments. This, if overdone, by the Government and the media may create an environment that will only serve to create a self-fulfilling prophecy.

Companies and consumers are already holding back spending, more than they need at times – being kiasu , just in case. Salaries are cut back, just in case. Bonuses are cut back, just in case. Corporate spending is cut back, just in case. If this happens too much, the economy will be further hit and there is only so much rebates and credits that the Government can offset. We always say

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that in every adversity, there are also opportunities. Thus, I think that Government messaging is important to help Singaporeans and companies here find their ways around to seek new opportunities of growth or reinvent themselves.

I have spoken at length earlier about finding a way to prepare ourselves for a better future. We have to do more than just create supply-side policies without generating demand or pointing to where we see demand. We forget sometimes that we are a small economy, a small country, and by measure of global demand, our GDP is not large compared to global trade. We can certainly find new niches and we need to train our companies to position ourselves as a whole. We have created a solid and sophisticated supply-side budget to help companies with their cost issues and save jobs. But there are areas in the Budget and policies that are not emphasised enough.

Let us do more to communicate what businesses can do with innovation and R&D measures, rather than just cost-cutting. Let us have more success stories on talent retention and development using the various programmes available, rather than retrenchment. Let us show our workers the way to realise their value and potential – no matter how old they are – and the programmes that they can take advantage of to position themselves for growth, rather than focus too much on unemployment figures.

Is the world economy in crisis? Yes, it is. Is it the end of the world? Last I checked, it does not seem so. So, let us accept that the picture is gloomy and work on the execution. We have an excellent budget laid before us. Let us send the signals in a big way to help the people and businesses find those silver linings in this gloom and, hopefully, the rainbow and the pot of gold at the end of

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it, when the sun shines again after the rain.

With this, I support the Budget.

6.22 pm

Mr Ong Kian Min (Tampines): Sir, last year, Mother Earth was ravaged by a series of devastating natural disasters, such as Cyclone Nargis and the Sichuan earthquake. As if these catastrophes were not enough, a financial tsunami swept across global economies leaving a wake of devastation, panic, shock and disbelief. No market has escaped unscathed. All major markets are reeling from the shock while grappling with new revelations of losses. On 28th January 2009, it was reported in the Straits Times that more than 90,000 jobs will be slashed from the payrolls of companies mostly in the US and Europe. 26th January 2009 will go down in history as "bloody Monday", for the largest job cull in a single day ever.

Notwithstanding the doom and gloom elsewhere in the world, in the last few months, right up to about mid-January, Singaporeans were still out shopping and dining. Visitors remarked that they did not see any visible signs of recession here; and unless I brought up the issue in my community dialogues, no one mentioned the looming economic difficulties either. It seemed to be business or rather spending as usual in Singapore. Perhaps that was due to the year-end school holidays and the various recent festive holidays where people were determined to enjoy themselves no matter what. Perhaps Parliament was not in session and before this House sat on 19th January 2009, there was not much public attention or awareness of the local economic situation. But I think it is most probably because having weathered numerous crises over the past 10 years – Asian Financial Crisis, September 11th, dot.com tech bubble burst and SARS – our people have confidence in our Government's able

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leadership and that we will manage to pull through somehow. But there is no doubt that this recession is unlike any other that the world has experienced in the last 60 years, and I fear that the reality of the downturn will hit us hard regardless of whether we talk the market up or down.

Over the past years, our Government has continually and successfully diversified the economy. However, under the current global economic crisis, most, if not all, of our engines of growth have slowed down or are threatening to stall. It is a hard fact that our exports have fallen sharply. Some pessimists say that we will be the last to recover from the downturn because we can only recover when our major customers pick up. Sir, we can approach this problem two ways. One, we can either do nothing and sit idly waiting for the major economies to pull us out of this chasm or, two, we can take positive, proactive steps to seize opportunities even in times like these and surface from our trials faster and stronger like a forged sword. What actions should be taken to prove the naysayers wrong so that instead of being one of the last, we become one of the first to recover from the impact of this financial calamity?

With all means available at our disposal, we must prepare for the worst and hope for the best. In this regard, I give my unequivocal support to tapping into our reserves, not to fund the entire budget deficit, but for the two one-off measures which comprise the cleverly-crafted Jobs Credit Scheme and the much-lauded Special Risk-Sharing Initiative for bank lending. Drawing into our reserves to fund recurring expenditure would be a bad signal, the wrong signal, that in future we can always turn to our reserves whenever we need more money. We should not dip into our reserves save in a critical situation such as the present crisis. When we faced the Asian Financial Crisis in 1998, many at that time asked whether our reserves were meant to help

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us to pull us out of that crisis. The answer then was a rightful "no", the reason being that that storm was not severe enough to warrant dipping into our hard-earned reserves. Having weathered the Asian Financial Crisis independent of any reliance on our reserves, our economy and our people have emerged stronger with added confidence in our nation's ability to overcome adversity. Somehow, we must etch deeply and permanently in our collective memory the enormous severity of this current crisis so that in future we know that the reserves are only intended to see us through perfect storms of a magnitude no less than the one we are facing now.

Although this crisis is not about our cost competitiveness, but about dwindling global demand, I am still concerned about how it will affect our attraction as a city for global investments. A friend from England who has been living and working in Singapore for the last seven years went back to London last Christmas to visit his family. He told me that when he converted prices in London based on the then prevailing exchange rate of 2.1 Singapore dollars to one British pound – this is compared to 3.1 Singapore Dollars to one pound a year ago – London was cheap. I never thought I would hear someone say London is cheap. Here, I have a friend who has gotten used to Singapore prices and saying London is cheap, albeit at the current exchange rate. So, I wonder whether the converse is true – that foreigners will find Singapore expensive. We do not want to miss out when things rebound. Our Singapore dollar is pegged to a basket of currencies of our major trading partners. The US dollar and the Japanese yen have appreciated sharply as money flowed back seeking safe havens. At the other end, the Sterling pound, the Australian dollar and the Korean won have all fallen sharply against our Singapore dollar. Sir, this

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credit crisis has badly shaken, if not toppled, major financial institutions and businesses across the globe. The upheaval has led to massive restructuring, relocations, downsizing and thousands of job losses everywhere, including Singapore. In considering where to cut costs, will their Singapore operations be one of the first to go because we have become too expensive? In the aftermath, when the dust settles, I wonder whether when the time comes for these businesses and financial institutions to consider which locations in the world to ramp up their global operations, will Singapore be passed over as being too expensive?

Sir, this Budget's emphasis on preserving jobs and keeping businesses in business will boost our chances of weathering the recession. I fully endorse the Government's commitment to respond swiftly, vigorously and decisively to this unprecedented economic crisis. In some of the companies of which I serve as a Board member, we have to retain workers and even pay good bonuses and give normal increments to retain capabilities so that when the situation turns around and business recovers, we will have the capabilities to deliver. We do not know when the situation will turn around; we can only keep going for as long as we can. It is most welcoming that the Government has created the Jobs Credit Scheme to sustain businesses as a going concern and help employers with their wage costs through this uncertain period. Not just so that companies can continue to provide jobs for Singaporeans but to retain key capabilities that once let go, cannot easily be replaced.

These short-term measures are indeed necessary and will alleviate cost burdens on businesses over the immediate term. Nevertheless, these short-term measures while buying time and tiding us over some of the present difficulties may, all said and done, not be effective in sustaining our

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survival in the longer run. It is imperative that we retain our perspective of the crisis and we survey the forest apart from the trees. Our Government must be prepared for all eventualities, especially the worst case scenario of a deep, dark and long recession lasting several years. We must be prepared that this present economic downturn might not turn out to be a "two-quarter crisis". We must be prepared, mentally and strategically, to tackle this downturn as a five-year exercise. Longer term structural solutions to save our SMEs must be considered and put in place because this crisis may become a very long-drawn down cycle. The worst would be to leave our people with the assurance that this downturn will only last two quarters and the economy will rebound and things will be back to normal by year end.

As no two recessions are the same, each recession requires a different response. This time, the markets have changed in a fundamental and structural way that merits a fresh and innovative response from our Government. The post-crisis world will be different. Examining the effects of the credit crunch, we see that there has been demand destruction; the traditional credit chain, money chain, trade chain, supply chain and the market have all been affected. The old framework has changed; the market has broken down. We can go on to pump in resources to keep the old structures alive, trying to save the existing business structures, but how long can they be sustained?

Big global companies have grown too big, saddled with too much leverage and burdened with too much excesses which need to be trimmed down. Consequently, some of the incumbents are unlikely to be able to regrow or rebuild their businesses. Unless they receive external help to ensure an orderly trimming down, chaos, massive job losses and social unrest are likely to follow. Government must be

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prepared to step into the arena of commercial entities, forcing consolidation, mergers and managing an orderly trimming down. In such transitional times, our Government must step in to play a bigger role in the economy. I agree with Mr Liang Eng Hwa. We have to reconsider the trend over the past many years of privatising Government agencies and downsizing the Government. In the light of the numerous corporate failures and debacles, we can no longer trust corporate leadership to chart the way out of this abyss alone. In this uncertain environment, corporate leaders face new challenges in formulating strategic plans simply because there is no visibility of orders, sales and what the global financial situation will be like in one, three or six months. Many companies are barely able to react to the last piece of bad news; they are barely managing to survive from day to day. In our efforts to emerge from this crisis, the Government can no longer simply set policies, regulate and let free market forces operate. Thus, I agree with the Finance Minister. The Government has to take more risk and be more involved in steering the economy out of this mess.

I would now like to make an appeal for our SMEs. SMEs form one of the key pillars of our economy, employing more than half of our workforce. For the majority of our SMEs, outlasting the present economic crisis is proving to be a rough swim. I would urge that long-term structural solutions to save our SMEs be created and put into motion as this may become a long-drawn down cycle which our SMEs would find the hardest to weather. Most of our SMEs are not prepared for a downturn of this magnitude. For a start, many of them are not financially well-managed, having been lured by the excesses and easy credit of the recent boom years. Over-stretched and highly leveraged, many of them are in poor shape to cope in this crisis. The Special Risk-Sharing Initiative proposed in the Budget is meant to give them a

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greater chance of securing the funding they require. However, since it is the banks that ultimately make the decision whether to extend the credit, the same principles of credit assessment must be applied. It is unclear whether these businesses can be considered a good credit risk if they have no orders and no sales, and if the additional borrowings are required to pay operating expenses.

Even in the best of times, many SMEs are hard-pressed to spend their limited resources on professional help. In these difficult times, SMEs will have even less, if any, resources to devote on such spending. On the other hand, presently there are a good number of well-qualified investment bankers and finance professionals who are unemployed or under-employed due to the downturn. They have much expertise and experience to offer. I strongly urge SPRING or other Government agencies to engage some of these professionals and pool them together to form a task force to help our SMEs rebuild their finances. SMEs will need customised and targeted help to reorganise their operations, seek additional financing, generate alternative cashflow and re-negotiate their borrowings with their bankers.

Sir, in this period of trimming down, we have to create new economic players to absorb the excesses from job losses. Therefore, I applaud our continued emphasis on innovation and R&D, through good times and bad. During the economic malaise of the 1970s in the US, a young man with an SAT score of 1590 and a burning ambition could not find any existing job that could possibly satisfy him. The big corporations were not hiring and Wall Street was lethargic. That young man was Bill Gates who went on to start Microsoft. Some of his peers in that economic rubble of the 1970's created Apple Computer, Oracle Systems, FedEx,

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Southwest Airlines and Genentech. From that period emerged the Internet, graphical user interface, PostScript language for printers, and ways to link computers into local area networks. These inventions appeared in the market later in the 1980s and went on to vent their full disruptive force on traditional businesses and changed the way business was done. Those bright young people could not find meaningful employment and had to resort to unconventional careers. Entrepreneurship thrived. This is also going to happen now. We need to seed these new ideas and nurture them.

Sir, in conclusion, I support the initiatives of Budget 2009 and the Government's swift and decisive response to this unprecedented economic crisis and, at the same time, I would like to urge everyone not to assume that this will be a "two-quarter downturn" but to prepare for the worst and hope for the best.

The Senior Parliamentary Secretary to the Minister for Community Development, Youth and Sports and Minister for Transport (Mr Teo Ser Luck): Mr Deputy Speaker, Sir, we are in unprecedented times, we are in unchartered waters. I read in a press release by MTI in August 2008, stating 4% to 5% growth. Within one quarter, the year closed off much lower, at 1.2% growth. So much has changed in so little time. What started out as a financial crisis has now become an economic crisis. Businesses are failing and economies are struggling. The International Monetary Fund has projected that world economic growth rate will fall to 0.5% in 2009, and this is the lowest rate since World War II. No economic crises have reached this level in my lifetime, and I believe in the lifetimes of my fellow Members in this House.

The $20.5 billion Resilience Package is a bold budget. But it is not a miracle pill. It is not going to lead us out of the recession, it is only going to cushion the

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impact. As the name of the package suggests, it builds resilience in a time when it is most needed. But what is more important, it provides hope and assurance – hope and assurance that Singapore will pull through this recession and emerge stronger. But we have to recognise that Singapore is an open economy that is highly dependent on external economies. Because if you look at our exports, because of the recession in the key US and European markets, Singapore's non-oil domestic exports declined by 21% in December 2008, that is the sharpest decline in seven years. As an indicator of how exposed Singapore is to the world economy, Singapore was the first Asian country to enter into a recession last year. But being the first country to enter into a recession and being a free economy, we may also become the first to recover.

Because of this, how strongly Singapore survives this recession is largely dependent on how strongly other economies survive. In this regard, we need to anticipate and react quickly as the world economic situation changes. But the question is whether we can anticipate and react fast. We do not know which company or bank is going to fall tomorrow, next week or next month. How do our systems and processes cope with these uncertainties? Whether this Resilience Package is flexible enough to respond to further changes in the economy? The question is, how do we shorten the lag time between the economic changes and the Government's response? How long can this Package and other packages for next year sustain us?

Allow me now to contribute to the discussion on three of the components of the Resilience Package. First, the $5.8 billion Special Risk-Sharing Initiative (SRI). It is a bold move and it is calculated risk by the Government - sharing this risk to enable and encourage the banks to release credit. It is unlike other countries. I do not believe this is a bailout initiative. But

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the question is, will the bank focus on those larger and safer bets and businesses to help and release the credit? We have a fine balance to strike in the risk management. There is also a need to guard against a perverse incentive structure whereby the banks lend money without due checks and leave the Government carrying the burden of bad loans. Are there any checks and balances to ensure that the public funds are well spent, especially on those unsecured loans where the loans are not backed by any company assets? In times like this when we want to limit further risks and uncertainties to the economic system, the Government must also exercise due care.

Secondly, besides increasing liquidity to help companies, the Government has also decided to reduce the corporate income tax rate from 18% to 17%, and that cost the Government some $400 million to $500 million a year over the medium term. Even reducing the income tax rate, we are not the lowest because Hong Kong still remains at 16.5%. However, together with the Partial Tax Exemption scheme, our effective corporate tax rates are now lower than that in any other countries for SMEs. This increases Singapore's competitiveness, but where do we find a replacement source for the income loss? And would we know how much more incremental investment commitment and jobs would be created as a result of this 1% corporate income tax cut? Would these investment commitments and jobs created only realise a few years later when the economy turns around?

I trust that all would agree that protecting jobs is key in this package and is important in this economic situation. Thirteen thousand workers were retrenched in 2008, compared to 7,700 in 2007. What is more worrying is that more than half of the total number of workers retrenched in 2008 occurs in the last quarter of 2008 and this situation is going

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to turn worse quickly. I hope this rate of retrenchment does not sustain in the medium to long term. To this end, the Jobs Credit Scheme is a welcomed one for companies and workers. I received many positive feedback. Some business owners described it as money dropped from the sky, and because it is from the sky so they know how to be grateful. And others felt that this scheme is straightforward and very direct and the best of all, there is no need to fill in any application forms. But the question is whether the credit of 12% on the first $2,500, pegged at the median wage of Singapore workers, is sufficient. I remember that when I was in the private sector, it was the bottomline numbers that counted.

You do not have to depend on any schemes. It was the results and you still have to terminate the staff. Because in this case, cutting a job would save the company $2,500 while saving the job would actually save only $300. We know, for example, that Chartered Semiconductor is now retrenching some 500 workers in Singapore despite the scheme. How would we then, in the current situation, incentivise companies to make full use of the scheme and preserve jobs? Should the payment be made more regularly to improve cashflow for the companies? So we need the companies to be aligned with the objective and proactively look for ways to reduce cost and also keep the workers. When the economy picks up, they would not have to go through the trouble to find the workers because that would incur additional cost. Some companies actually transfer the staff, redesign the jobs, re-engineer the process, make themselves more lean and efficient.

And I do not agree with the Member, Mr Low Thia Khiang, that the Jobs Credit Scheme is totally not effective. Because it is a matter of doing what we can to save even one job. It can also make

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companies more competitive. So it is better to do something than to wait for something to happen.

Besides helping to retain the jobs of lower-income workers, we should not forget the plight of the other slightly higher paid executives as well – the PMETs. Their jobs are equally at stake. In fact, their jobs are more at stake because they form the larger cost of the company and you will have saved a lot more cost if you terminate their jobs. A working executive earning $3,000 to $4,000, having to support his young children and elderly parents, can ill afford a retrenchment. They are squeezed in that sense. We should look at measures to help retain these jobs as well.

The economic outlook is not optimistic. Key European economies are not looking good. The British banks are nationalised, the Pound has depreciated greatly. The US economy is not looking good either. US companies are looking for bailouts. This economic crisis goes beyond the board rooms into our homes. We hear of family disasters. We hear of fathers losing jobs and mothers finding it hard to cope in providing for their children. During these difficult times, it is even more critical for families and their extended families to stay together, give one another support and be ready to extend a helping hand. I have sob stories to tell, I am not going to tell them now because it gets very depressing. But the community must help one another. We must keep together because we cannot let anyone fall behind.

The economic landscape remains bleak, but our confidence for the future must not. It does not help when all we hear and read is bad news. We know it is there and we need not be reminded daily. It is just like one of my friends who told me that, "If I am fat, don't keep telling me I'm fat. One day, I will jump." The economy may go into a recession or

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depression, but we should not go into depression. This is not the time to be a pessimist. It is a time when we must see opportunities in every challenge and not see challenges in every opportunity. How we look at the future has an impact on the people around us? We must instil confidence both at work and home. We must keep the family intact. Then we can maintain the stability in this country and brave the storm together. History has proven the resilience of Singaporeans, and I believe Singapore will be able to survive this crisis.

6.49 pm

Mr Seah Kian Peng (Marine Parade): Sir, I would like to congratulate the Government on this year's Budget. It reflects a Government which thinks of itself as an organic entity, rather than an aggregate of different departments.

This, I believe, is rightly called the "whole of Government" approach, the philosophy now underlying the Australian public service. This "whole of Government" thinking refers to public service agencies working across functional boundaries to achieve common goals. In short, it gives an integrated Government response to particular issues.

This approach was in fact first taken in the late 1990s, when Britain was facing a host of "wicked" problems". This term described problems which were intractable and did not fall into neat categories. In response, an integrated approach was needed – in which the whole Government was thought, or hoped, to be greater than its parts.

In Singapore's case, this approach has been the default mode of operations. We needed to be greater than the sum of our parts as a matter of national survival.

But today, with more regulatory bodies, with newer statutory boards, with

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ever-increasing complexities in society, we need to remind ourselves to take this approach to problems which seem increasingly intractable.

I urge the public service to adopt more of this approach because there are both practical reasons and reasons of principle for Singapore to do so.

For one, it is a matter of customer service. Citizens now are demanding that their needs be met in a seamless manner, and the public service should work to the needs of the people, rather than the other way around.

In principle, this squares with Singapore's vision of a participative citizenry. With more voices, more views to take into consideration, and more perspectives, we need Government agencies and officials to adopt a similarly open-minded attitude in working with other units within the Government. An integrated approach is certainly a better way to tackle complex problems.

The civil service stays lean and efficient while treating people who need help as individuals, not as cogs in the system. This is an unpopular route because it reeks of ad hoc arrangements and unique solutions. It is far more efficient to fit people into sets and precedents, and deal with them quickly and clinically.

But, as an MP, I can tell you that this is what reality is. Problems come in a lump, and it is sometimes not possible to solve one bit of the puzzle without dealing with the rest.

How then to resolve this tension between a systematic approach and a messy, ad hoc one? How to meet our demands for both high accountability and a holistic approach?

For one, I suggest that we make it a requirement for all senior and middle level

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civil servants to work the ground. They need to spend some compulsory hours at CDCs, VWOs, even Meet-the-People Sessions (MPS) to better understand and appreciate ground issues. Nothing like seeing, listening and feeling the ground. This will impact the formulation of sensitive policies, to be sensitive to real needs, rather than statistical progress.

Once officials start understanding the ground, they will appreciate that solving problems in a holistic manner does not mean creating an additional "coordinating layer" that oversees existing efforts. Rather, it gives them a feel for those people who have no voice in forum letters, who cannot get on the phone to talk to officers at different agencies, who do not even know where to start to get back on their feet.

If they take the time, they might have met a lady from my Meet-the-People Sessions. She has entered the histories of the MPS log books in my ward since the time of former MP, Mr Goh Choon Kang, some 12 years ago. I must admit that her personality is such that she is not quite easy to deal with and this makes it worse. She is a divorced mother of three, and she has a host of problems. I have written to four or five different agencies.

She was asked to show documents time and again, sometimes even before she has received those documents. While one department is processing the document, the next is stymied. But she needs the process to move because she needs a roof over her head. The good news is that this 12-year-old case is seeing light now.

They will also meet some invisible people – those that I call unseen residents who do not make it to my MPS. Like one 62-year-old man whom I met when I visited his three-room flat in one of my

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block visits. He is a diabetic and he recently had his leg amputated. In his 60s, he has a relatively young wife and three young children. His flat was bare, not very clean, and he was clearly at the end of his tether.

"Why did you not ask for help?" I asked him. He did not reply. Sitting in his wheelchair, he was ready to sink into his usual days of invisibility.

Sir, Government, even at its best, is a stochastic process. We cannot determine the outcome of our best intentions and our most determined efforts. We act the best we can, but we know that there is a random element over which we have no control and, most times, no knowledge. But this is the same with the practice of medicine. Doctors look at a patient, and sometimes, they are healed, sometimes not. And a few of these times, doctors cannot make the precise casual link. They do not know what happened. This does not stop them from saving lives and, more importantly, it does not stop them from trying.

Sir, we ought to keep on trying – to try and look at people as people, and not a set of problems. We ought to look at people, even when they are invisible, to seek them out and to make their lives better.

Sir, all this is the demand-side of the "whole of Government" approach. Now let me say a little about the supply side – that is, the role of public service, and the people who enter into it.

Sir, in Budget 2009, there is something for everyone, every business. I would like to take a step back and speak about the impact of the financial fallout.

Sir, these hedge fund managers, financial wizards played the system to their advantage, fleecing those who know less than them. There is corruption, rot

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and moral decay over the last decade that was disguised successfully by high dining, public proclamations to personal honour and honesty.

Of course, this does not happen just in the United States. It happens everywhere that money shines. It has happened in Singapore over the last 10 years.

In the past, a career in the civil service was an honour and a privilege. Today, I hope and I believe this remains true but perhaps to a lesser extent.

Sir, I urge a return to reality with three simple points.

First, the allure of public service. I want to ask our young men and women to take a moment and consider their true vocation. The public service is hiring aggressively and the temptation may be to apply just because it is easy pickings. But we ought to ask the brightest and the best in the private sector to consider coming into the public service as a true vocation, not just an easy option during the recession.

Nobel Prize winner Paul Krugman who writes for the New York Times recently observed that "the vast riches achieved by those who managed other people's money have had a corrupting effect on our society as a whole." He asked, "How much has our nation's future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking at the expense of science, public service and just about everything else?" More important, the enormous amount of money has "undermined our sense of reality and degraded our judgment."

Sir, now that we have seen through the false illusion of big money and the collective feet of clay in the financial sector, we ought to ask the brightest and

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the best in Singapore to consider public service for their careers.

Public service has its own rewards. The pay is competitive but there are so many other dimensions to be considered – the sense of mission, the difference you make in the lives of people, the exposure you will receive to the leaders of the country. All these cannot be expected in the private sector.

My second point – wealth comes in different forms. Many of us have seen residents who have lost their jobs or money to bad investments. No one has been spared. There are those who wear this loss lightly, and others for whom it has cost their lives. Sir, I urge us to return to the basics which matter most – our spiritual relationships, our family, our friends.

To this end, the Government can help in creating strong and resilient families.

Sir, Prime Minister Lee Hsien Loong has said that in difficult times, we could, and indeed should, turn to our families. For Singapore, this is not just a societal nicety but the bastion of our public policy planning. Family is the backbone of everything, especially when the chips are down.

So my point today is to ask the Government what it is doing to make our families more resilient. I will speak more about this in my cut on MCYS.

Sir, my last point is also about "whole of Government" approaches and the kinds of goals we can aim for, if we all pull together in the same direction.

I shall speak about one ranking that we want to get in, and another that we want to get out of. The first is a proposal to the Prime Minister that he sets a target for Singapore to become one of the top

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10 most liveable cities in the world by 2020.

Based on worldwide rankings, according to Mercer's 2008 Quality of Living survey, Zurich came in first, and it was followed by Vienna and Geneva, then Vancouver and Auckland. Singapore did improve from 34th spot to 32nd spot last year.

As expected, one of our strongest points was in personal safety. We scored 120.2 compared to Karachi's 25.3. Sir, the rankings are based on a wide list of factors – economic environment, socio-cultural environment and health and sanitation, a whole host of factors.

To improve our scores on so many fronts, we need to have an integrated approach. We should not do it for the sake of climbing up the rankings. Rather, we should do it because we should have a systematic approach to improving ourselves whilst keeping an eye on our own national values.

On the other front, we have, in 2008, also become the world's 13th most expensive city, based on Mercer's 2008 Cost of Living survey. We should aim to be as far down this list as possible – perhaps strive to be cheaper than Beijing and New York, which ranked 20th and 22nd spots respectively.

We ought definitely to be out of the top 20 cities in this list. But I still cannot take in the fact that we are more expensive than New York, so I hope the Prime Minister can set a target for Singapore to get out of this list of top 20 most expensive cities by 2015. Of course, the earlier the better.

Sir, again, such rankings are compiled on a range of factors and even as we strive to be cost-competitive, we ought to ask ourselves if we are providing good value for money. If we are, then we can

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rest easy, no matter what place we are on the scale.

Sir, I would like to end my speech by commenting on three specific points of the Budget.

We must ensure that savings must be shared with and passed on to tenants by property owners. Transport companies have already said that they would pass these benefits on to taxi drivers. And I have read of small businesses writing in to their landlords asking for reductions on their rentals. We must continue this public awareness campaign, put a bit of pressure to ensure that these savings go downstream.

As a labour MP working in an NTUC social enterprise, there are a few home facts that I must outline. Every business, big or small, will all benefit from this scheme which recognises and rewards all those firms who have been employing a largely local workforce. These savings must be shared with the various stakeholders, including staff.

Sir, in response to Mr Low Thia Kiang's earlier enquiry, this is precisely what NTUC FairPrice is doing. With or without Government incentives, FairPrice has been employing a largely local workforce – deliberately. We have done it for the last 36 years. Currently, 95% of our staff are locals, even though our quota is 30%, and come as a cost to us. Likewise, even before the Budget was announced, we had already announced that we will not be retrenching staff. We will be recruiting staff and we are upgrading our existing ones. With Jobs Credit, we are going to do even more for all our stakeholders from our staff to our business partners to the public and, certainly, to the poor and needy.

My call to all companies is that management should lead by example. Any wage cuts must start with that of the

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top management and it certainly has to be a progressive cut. Low wage earners and, certainly, PMETs are all the most vulnerable in this climate as their family members may be affected by the downturn, and companies have a moral responsibility to help their workers in this time of need.

The Government has made many significant and magnanimous moves to offer underwriting, to mitigate financial risks of banks and to support trade financing. But on the ground, the desired outcomes have not been fully achieved in helping SMEs with their cashflows. It is the usual "devil in the details" difficulties in implementation. We have a great and laudable idea. What we need is to deliver it. We do not want cases of approvals of these credit lines to come a day too late for businesses or that businesses just give up trying to apply for them. So we have to measure the success of this measure by how much is being lent and the speed of the process.

Sir, I have covered a lot of ground in this speech and this is because I felt the earth shifted beneath our feet this past year, much the same way it shifted after 9-11. We need a new orientation and a new philosophy in public life, and I have spoken on how we can do this.

I would like to end with an observation on our unprecedented move to dip into our reserves for close to $5 billion. The Prime Minister has said this is not a quick fix solution and in fact, there is no quick

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fix solution. The deeper recognition is that there is only so much we can do in and for Singapore. I hope the measures we have introduced in this Budget will be able to see us through and overcome this crisis. But what if it is not? Then we must try again and we should not be afraid of dipping into our reserves a second time to ensure we give ourselves a lifeline. We need to buy time as we wait for the rest of the world to recover. If we can afford it, and for the right reasons, let us by all means do so.

Sir, I support the Budget.