DEBATE ON ANNUAL BUDGET STATEMENT

ANNUAL BUDGET STATEMENT: Order read for Resumption of Debate on Question [15th February, 2008],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2008 to 31st March, 2009." - [Minister for Finance].

Question again proposed.

Mr Ang Mong Seng (Hong Kah): (In Mandarin ): [For vernacular speech, please refer to Appendix A.] In this year’s Budget Statement, the Finance Minister announced that the Government will share the $1.8 billion surplus with the people, which includes the Growth Dividends that will cost the Government $865 million. This is a very good surplus sharing

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package. I support the Government in its efforts to target more help for the lower income groups, the elderly, and the most vulnerable in the society. I am glad that the Government adopts this policy to help the lower-income group to cope with the rising cost of living in Singapore. However, many residents are not clear about the details of the sharing of the surplus. They asked me, "Why are there no rebates for rental, utilities and S&C charges?" In fact, they have forgotten that last year, the Government did provide such rebates to families in these areas. And so I said, “Last year, the Government announced a GST offset package that will be given out over four years, including rental rebates, utilities rebates and conservancy charges, and these rebates will last until 2010.” However, many residents are not aware of this, and they asked me if this was true. They are quite doubtful. But we know, in the past few years, the Government had given out many kinds of allowances, rebates and top-ups. However, the calculation of these sums of money varies from time to time. So they are confused.

As in the article "Government policies should not be too complicated" on 17th February 2008 in Lianhe Zaobao , Mr Cai Tian Cheng wrote that all these measures should be clarified and simplified so that the people can understand them. Some people have compared the contents in the Budget sharing package to yu sheng, ie, raw fish salad dish, eaten during Chinese New Year. Yu sheng has many tasty ingredients: colourful shredded vegetables and fruit, with freshly sliced raw fish and abalone, to entice the tastebuds. The surplus sharing package this year is equally rich in ingredients. The Government will give out $865 million Growth Dividends, CPF LIFE bonus, a 20% rebate on personal income tax, Medisave top-ups and more increases for top-up to Post Secondary Education Account. These top-ups and rebates are like the ingredients of the yu sheng . After

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tossing this salad and articulating auspicious Chinese proverbs welcoming happiness and prosperity into the New Year, the diners lift up their chopsticks to find that it is not easy to locate the raw fish and abalone slices in the salad. Similarly, people do not realise the full benefits of the Budget sharing package. In fact, there are many good ingredients in the Budget package, but they find it difficult to understand the contents of the Budget package and they do not understand the benefits of the package. Therefore, I hope that the Minister will simplify the details of the Budget package, by using pictorial illustrations in posters and newspaper reports, so that the people can better understand the details such as bonus amounts, distribution criteria, when and where to apply. All these are very important contents in the Budget.

There are many people who did not know how to apply for certain benefits. One example is the GST relief. Until December last year, many people still have not applied. This proves that we have to do more to publicise the benefits and details of surplus sharing with the people. They should not be complicated so that people can understand what these packages comprise. The Government should also put up posters explaining what these packages entail so that the people, notwithstanding their standard of education, will understand these packages and apply for them in time so as to achieve the purpose of the Government's sharing of surplus with the people. I hope the Minister would consider my suggestion.

Another issue is about CPF LIFE, the new lifelong income scheme, and this has been designed by the Government to look after the retirement benefits of the elderly people. However, this scheme will only commence in 2013. I would like to ask the Minister: why are we adopting this policy only in 2013? Since everyone

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agrees that this is a good policy, can we consider the implementation of the scheme within one to two years so that our people can receive the benefits earlier?

Thirdly, I would like to talk about the necessity to help Singaporeans above the age of 50 who have no CPF accounts benefit from the Government's surplus sharing packages, especially the housewives. In the early days, the norm was for men to work and bring home the bacon while the women took up the responsibilities of the home. Many women did not work outside their homes and have no CPF. They shoulder the responsibilities of taking care of the home, looking after their families, and bringing up their children. Because of their hard work in bringing up their children, we have a good generation of young people. They have been working very hard, they do not enjoy holidays, no CPF, no bonuses. They, too, contribute to nation-building but they have not been able to enjoy bonuses given by the Government. They deserve a share in our surplus sharing package. Hence, I would like to ask whether the Minister could allot a sum of money to help these women open CPF accounts and make a one-off $1,000 contribution to their CPF accounts. The money from this account cannot be used in other ways. It can only be used for their retirement, and their children also can top up such accounts. With these accounts, they would be able to share in the various kinds of top-ups given by the Government to other Singaporeans and enjoy a certain level of security in their old age.

Fourthly, I would like to talk about how to help the poor start their own enterprises. In the early days of our nation-building, our economy was weak and there were very few job opportunities. Many Singaporeans were unemployed. They could not find suitable

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jobs and became roadside hawkers as a means of livelihood. This was the fastest way to solve the problem of unemployment. Although they were poor, they were not willing to depend on the Government. They preferred to depend on their own efforts to make some money to support their families. This created many jobs. However, later, the Government wanted to tidy up the city landscape and so relocated these roadside hawkers to hawker centres. Today, our hawker centres have become a unique feature of Singapore society. In addition to providing cheap, convenient and delicious food, such hawker centres have also become tourist attractions, attracting foreigners to have their meals there. They contribute to our tourism sector and our economy. Cooking has become a career for this segment of our population. This has been a way to help the people in the low-income ground find gainful employment. This is a good example of killing two birds with one stone.

Today, more than 40 years later, we have progressed from a developing nation to the status of a developed nation. Although our economy is thriving, there is still a minority of people who have not been able to find jobs. These people are forced to go to the CDCs to ask for financial assistance. However, such short-term assistance cannot help them in their long-term livelihood. They are given $100 to $200 a month and this money will be spent soon.

Therefore, it is better to teach the people how to fish, rather than give them fish. And it is not easy to make a livelihood nowadays because, to start up a business, unlike in the past, it requires quite a big sum of capital. Rental is high and they cannot set up stalls by the roadside. I have read a book and the gist is how to make money and get rid of poverty, for instance, buying Toto or Big

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Sweep tickets. Recently, there was a $10 million prize for Toto and many people flocked to these Toto outlets to buy Toto, but the hope of making a fortune is very slim. The more they buy, the poorer they become. So, why not give them some jobs or business instead? They can start with a small business. We should help those who are enterprising, give them a helping hand, to start with a very simple business, such as setting up a stall at pasar malam , ie, night market business. However, the pasar malam business has changed in nature. These pasar malam stalls have been tendered out to contractors. The poor do not stand a chance. I suggest that the Government issue licences to such poor people who wish to become hawkers so that they can become self-reliant. For example, in Taiwan and Hong Kong, there are tourists' streets such as Women's Street. At night, the whole street is crowded with people. After midnight, the street becomes very quiet. We should adopt the same policy and allow people to work at night markets or pasar malam . We can make use of the data from the grassroots organisationsto find out who are these poor people who are eligible for help, so that they can start up small businesses to support their families.

When I have meet-the-people session in my constituency, many residents have come to me for help to get a school canteen licence, so that they can sell food in school canteens. However, the schools normally tender out such stalls to businessmen who in turn tender out to the highest bidders. Therefore, such poor people are not able to get a stall licence at the school canteens. In the early days, our school canteen operators pay only a nominal rent. I feel that the management of school canteens should not be too commercialised. The priority of canteen stall licences should be given to the poor people. This is one way to help the poor people start up a small business. So, we can consider helping them to get a loan

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from a bank so that they can start a business. Currently, our banks do not loan funds to them.

Through our CDCs, the Government has given to the poor people $100-$200 a month. However, can the Government also consider giving them a lump sum assistance allowance, about $800 to $1,000, as a capital sum for those who are thinking about starting a small business.

An economist from Bangladesh, Muhammad Yunus, has seen the exploitation of the poor by loan sharks in his country and, therefore, he started a small credit bank in Bangladesh called the Grameen Bank, offering unsecured loans to the people. In the beginning, people mocked him for doing such a thing, and they feel that it is silly to loan money to the poor, for he might lose all his capital. However, the bank has maintained a record of surplus revenue for nine years. Among the 6.39 million loan borrowers, 58% of them have managed to escape the poverty trap. And, so, Muhammad Yunus was awarded the Nobel Prize for Peace in 2006. I would like to ask the Minister whether we can consider implementing similar measures in Singapore, or to consider inviting the bank to open up a branch in Singapore.

With the abolition of the estate duty, Singapore is likely to attract more wealthy people to live and invest here. This will be a boost to our economic development. But the question is whether our economic development will bring about a greater disparity in the income gap between the rich and poor, as this will also mean more social problems. Therefore, we should provide opportunities for the poor people, help them to find jobs, or to change our policies to help them earn a living, so that they can make due contributions to the society. I hope the Minister would consider some of the views that I have put forward.

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With this, I support the Budget.

*Cols. 863-872.

12.18 pm

Mr Liang Eng Hwa (Holland-Bukit Timah): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] This year's Budget was announced by the Finance Minister in the midst of Singapore’s rising inflation. Like many developed countries, Singapore faces the challenge of soaring inflation, in particular, fuel and food prices are dramatically higher.

When I met residents in the constituency, some residents will feed back to me about the rising food prices, such as for bread, butter and vegetable oil. They have no shortages of real life examples to share as to how they are struggling with rising food costs.

According to the Financial Times, the global economy is facing a second wave of food inflation after the United States Agriculture Department warned of significant falls in stocks of corn, wheat and soya bean. Officials forecast that US wheat stocks would shrink to their lowest in 60 years, and the US is the world’s biggest exporter of wheat.

Soft wheat prices on 15th February 2008 rose to a new high of US$19.88 a bushel, three times higher compared to last year. In the United States, the bakery sector urged the government to curb wheat exports.

Corn and soya bean stock prices have also reached a new record high. Rising prices for wheat, corn and soya bean will force up feedstock costs for farmers, leading to higher meat and poultry prices, including pork, beef and chicken, for consumers.

Through feedback from residents, I can sense that rising cost is currently the most pressing concern. And I can

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understand their predicament, as the saying goes “ Min yi shi wei tian" (民以食为天) - people regard food as their primary concern as food is the first necessity and, as such, there is nothing more important than filling one’s stomach, and to ensure that one’s family gets three meals.

For many years, we have enjoyed low inflation rate. Through economic reforms and open economic policies, China, India and other developing countries have increased productivity substantially, flooding the global markets with cheap manufactured goods. But the world is different today. With its emergence as an economic power, China has become more affluent, and this equates with a higher consumption power on the world stage. The country has shifted from being the largest exporter of goods to also one of the the largest importer. Domestic demand has been growing in China, with strong demand for resources such as steel, fuel, food, etc. This has contributed to a rapid increase in oil and energy prices. As such, China today no longer helps in keeping world inflation at a low level. In fact, with its strong domestic demand, it is also one of the causes of the inflationary pressures world-wide. Therefore, I am relieved to learn that, in this year’s Budget, besides investment in our future competitiveness, the Government has also implemented a series of practical assistance packages to help the people cope with inflation.

Besides giving direct financial assistance to the needy, the Minister for Finance has announced a four-pronged strategy to deal with inflation and its long-term challenges, namely, exchange rate adjustments, diversifying food sources, home ownership and, in particular, strengthening our competitiveness in the long run. To achieve sustainable growth, it is critical for us to increase our

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competency level. By increasing competitiveness, we will have more opportunities, thus more income for the people to cope with inflation.

On this note, I would like to make a few points.

Firstly, strengthening of the Singapore dollar. All this while, we have allowed for an appreciation of the Singapore dollar to reduce imported inflation. This has been an effective strategy. If we had not pursued a strong Singapore dollar policy, our inflation would have been higher. However, a strong currency will reduce export competitiveness and it may also affect the tourism industry. The Singapore dollar appreciation will also tend to lower interest rates, which means lower interest income for savers and reducing their purchasing power of their savings. A robust economic growth will allow for the currency to appreciates, but if the Singapore dollar continues to appreciate while the economy is slowing, this will translate into slower growth in the labour market and eventually result in lower wages and employment. Therefore, appreciation of the Singapore dollar is not an option that is always available to us.

Secondly, to curb growth in domestic demand. Inflation in Singapore is affected by the rise in global inflation. However, some of the inflationary pressure also originated from strong domestic demand. For instance, if we have too many mega construction projects all going on at the same time and the construction industry cannot cope with these numbers of projects, this will inevitably push up construction costs and add inflationary pressures. Eventually, the higher construction costs will be transferred through increased prices to the consumers. Take, for example, our future Sports Hub. The fund allocated for the Sports Hub has increased from $800 million to $1.2 billion. Hopefully, this will

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not mean that sports will cost more in the future.

Therefore, I am heartened with the Government’s effort to moderate demand in the construction sector by deferring about $3 billion worth of developmental projects. The construction industry is enjoying its strongest growth and, as such, the Government has taken measures to mitigate the situation. Last year, the construction industry enjoyed a strong growth of 20.3%. With limited capacity and foreign workers to fill the gap, any increase in demand will lead not only to unnecessary increase in prices but also an increase in construction costs.

Thirdly, the public sector should exercise restraint in not increasing the prices of its services. Social services such as medical services, tertiary education, JTC rental services, etc, are provided by the Government or its agencies. Therefore, the Government should refrain from increasing the fees, and to delay price increases, if possible, so as not to add to the already rising inflationary pressure.

I am mindful that many Government agencies are already charging a fee on a cost-minus basis and their fee revision is lagging behind the market. Nevertheless, during this sensitive period of spiralling inflation, the Government agencies should not be ahead of the curve to increase its charges now. This may lead to the private sector and the various industries to follow suit and increase their prices as well. Therefore, I urge the Government to announce a one-year freeze in Government fees, including medical subsidies, as this will reduce inflationary pressure and further avoid a chain reaction from the private sector.

Fourthly, to inculcate right values of frugality. Many Singaporeans are not prepared that the current high level of prices is here to stay for a while.

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According to the Financial Times report, food prices will hit a 30-year high. Factors affecting food prices include large-scale biofuel production, severe effects of climate change on agriculture, the emergence of developing countries, etc. These factors have affected total demand for food. Food experts warned that this round of food prices increases may be structural and prices will not fall in the short run.

Therefore, Singaporeans would need to adjust and make changes to their lifestyle. Businesses are already doing so. For example, some retailers, like NTUC Fairprice, launched their own house brand products. These offer consumers some cheaper options and help them save money on their grocery bills. I hope more Singaporeans will consider these house brand products.

Currently, the Government is also looking into diversifying our food sources. This is a very practical strategy. Take, for instance, frozen pork. The frozen food products can be a good alternative food source and it gives consumers another cheaper choice. We should support and promote this policy.

This morning, one of my office colleagues even suggested that we should consider reducing the number of dishes served at wedding banquets and dinners from usual 10 dishes to eight dishes. Not only is it good for health, it also helps to cut down on food waste. He said, with some humour that, “this may even take some pressure off the hongbao inflation for wedding dinners”. This is for reference only, and I am not advocating that we pass a law to limit the number of dishes served during wedding banquets.

In the next two years, the economic and inflationary outlook is uncertain and not optimistic. Therefore, I support the Government’s policy of being prudent in its Budget, and share part of the budget

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surplus by way of giving hongbao to the needy. This is so because high food prices are not our only concern. High fuel prices have also created uncertainty in the market. The US subprime crisis is likely to drag the US economy into a severe slowdown. This will have a direct impact on Singapore’s economy.

A key factor behind this year’s surplus was the strong growth in the property market, where approximately $3.8 billion was collected from stamp duties on property purchases last year. This is unlikely to be repeated again. Budget surpluses are our precious strategic resource and we should not have a “must spent all” mentality. Rather, it is more important that we spend it the right way and distribute assistance to those Singaporeans who need help. The remaining surplus can still be used for rainy days in the next few years.

Given the uncertain prospects of the economy, we should be cautious and keep our powder dry. This is in fact what a responsible Government should do. The Budget stance adopted this year also signals that we need to be prudent and thrifty.

Earlier, I have mentioned that the Government adopts a strong Singapore dollar policy to curb imported inflation. However, the appreciation of the Singapore dollar cannot be taken for granted. Investor confidence is one key factor to determine whether the Singapore dollar will appreciate in the foreign currency market, in particular, the financial credentials of the Government. Therefore, I believe that prudent fiscal management will strengthen our credentials and all Singaporeans will eventually benefit from it.

In conclusion, this year’s Budget is compassionate, prudent and farsighted,

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and it has achieved a good balance in these three areas. Although this year’s Budget is not a pill that will cure all problems, it is indeed a pill that puts our mind at ease.

With this, Sir, I support this year’s Budget.

*Cols. 873-880.

12.30 pm

Dr Lily Neo (Jalan Besar): Mr Speaker, Sir, I stand in support of the motion raised by the Minister for Finance.

This year's Budget was clearly formulated with the most economically vulnerable group of Singaporeans in mind - the group worst hit by inflation and the rising cost of living. I am most happy with the public assistance allowance increase. I would like to thank and commend both the Minister for Finance and the Minister for Community Development, Youth and Sports for the increase. I am sure the 286 public assistance recipients in my constituency and throughout Singapore would appreciate the increase in their monthly public assistance allowances.

I was particularly encouraged by the Finance Minister's assurance during his Budget Speech to "continue to refine the safety nets to help the most vulnerable in the community". I endorse this initiative wholeheartedly. Finetuning the present social support system is necessary to address the concerns of this group of Singaporeans. I shall address this later in my speech.

Today, I shall speak on: (1) the challenges faced by the lower-income group in Singapore; (2) the potential ramifications to our social fabric; and (3) propose initiatives which I hope would complement and augment current and future plans for a stronger and more refined social safety net.

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Two key challenges currently facing lower-income Singaporeans are (a) real wage stagnation; and (b) job volatility.

(a) Wage stagnation. In an increasingly skills-biased economy, our low-wage workers and their families have had to run faster just to stand still. In today's world of outsourcing and cheap international labour, it is still possible to be gainfully employed but still not earning adequately to feed one's family.

Some of the deleterious aspects of globalisation have led to real wage stagnation at the lower-income levels for the first time in recent years. The bottom 30% of working families have now experienced stagnating real household income for eight to 10 years. Our poorest, numbering some 90,000 to 100,000 households, still earn around $160 per month per capita, the equivalent of around $640 per month for a family of four. This compares to a measure of the average basic expenditure of around $1,040 estimated by the Department of Statistics to indicate the need for social assistance. The poorest and least skilled have been the hardest hit. Median monthly starting pay for cleaners and labourers has fallen by nearly 33%, from $860 to $600 between 1996 and 2006.

Not all are enjoying in our recent successes. These figures indicate that our poorest and least skilled have not only not benefited from Singapore's recent successes, they have, in fact, been hit the hardest as a consequence.

(b) Job volatility. Low-wage workers and their families are also more vulnerable to job volatility. The increasingly competitive labour market, changes in work design, and influx of foreign workers have all contributed to increased job volatility. Low-wage workers are typically less adept in navigating this particular challenge, whether it is to switch

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employment in the same industry, or in another industry altogether.

I see two clear ramifications posed by these challenges:

First, there is a limit to poverty alleviation by working longer and harder, or driving down the unemployment rate. We cannot expect lower income Singaporeans to keep on running faster and faster but yet find themselves not progressing. They will eventually tire out and become disillusioned, which leads me to the second ramification - the effect on our social compact.

Second, there are concerns that, in the long run, the rising levels of inequality may engender the politics of envy and affect Singapore's social compact. It is vital to maintain a strong and cohesive Singapore to meet the challenges of the future and to ride in the global growth.

What then can be done? How should we, as Finance Minister had said, "refine our safety nets to help vulnerable Singaporeans cope?"

The positives are that there have been a more diverse and greater number of schemes, which have helped up to 64,000 individuals and families last year compared to 15,000 in 2002. These schemes have helped parents with childcare and kindergarten fees, and provided short-term aid for the unemployed until they find employment.

However, short-term handouts by themselves are not sustainable and do not do enough to help these individuals and families become self-reliant. Current net Workfare payments of around $80 to $100 per month are also barely able to bridge the gap between bare subsistence and the small surplus needed to invest in human capital at the household level. Yet, they remain the fastest way of upward mobility without compromising work ethic and with relatively low cost.

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We would have to explore the need for a stronger, direct social safety net which would enable us to take advantage of globalisation more quickly and boldly. The continued evolution of our Workfare Income Supplement Scheme (WIS) is a step in the right direction. This should be coupled with initiatives aimed at maximising our human capital investment. A key strategy to circumvent the effects of wage stagnation and job volatility is to focus on upward mobility. In other words, we need to help this vulnerable group of Singaporeans, who are running harder just to remain where they are, to move forward. A key to upward mobility is, what I mentioned earlier, human capital investment.

What can be done to ensure that lower income Singaporeans and their children are getting somewhere with all that hard running? We need to invest in them and their children so that they can use that extra "energy" to better themselves and become more upwardly mobile.

An integrated case management approach focused on human capital investment will help these individuals and families escape poverty and become more upwardly mobile. I concur with the Finance Minister who said in his Budget Speech that "our fundamental approach to helping Singaporeans in need is to help them get a good income for themselves. The best way to do so has been and remains to help needy Singaporeans get a job, and to encourage them to stay at it, upgrade themselves, and support their family members." This is the essence of the human capital development approach.

In this regard, I would like to propose a three-pronged approach towards the development of human capital for this group of Singaporeans. The three aspects are: (1) direct assistance in the form of a

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package; (2) improvement of means of delivery; and (3) constant updates to training programmes.

I wish to propose a new initiative in the form of a comprehensive assistance package for low-income families focused on human capital investment. The package would include employment upgrading opportunities for parents, new employment opportunities for unemployed spouses, and continued assistance in the form of counselling, childcare, kindergarten and tuition fees for their school-going children. Such a package would help parents with child caring responsibilities, so that the parents themselves would have more time to upgrade themselves.

I am encouraged by the Finance Minister's promise to "enhance our financial assistance schemes (CFAS and KiFas) to help more families with their children's fees in kindergartens and childcare centres." With these enhancements, any comprehensive assistance package could better help young low-income families and particularly their children, who will be given a chance to compete on equal terms. Children from such families face a greater challenge participating in the education process. Longitudinal studies show that when children begin education at a young age, they do not only do better in school but also become more productive as adults. Such a package would give these families, and particularly their children, a much needed boost, enabling them to cope better in school and prevent them from dropping out.

Improvement in delivering assistance to those in need is core to ensuring the development of human capital in this group of Singaporeans. Without the proper delivery of assistance, they would not have the starting base from which to even begin. I thus strongly suggest fine-tuning our present social services by revamping the delivery aspects, even if it

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means incurring expenses in manpower to do so. This will ensure that the diversity of our many schemes, which have been criticised as mostly incomprehensible, reach our targeted group and reap the desired outcomes. Such an effort would go a long way to ensure that such families will not fall through the cracks. This would, in turn, contribute to our goal of pursuing a sustainable approach in helping lower income Singaporeans become more upwardly mobile.

There need to be constant updates to existing training programmes. Human development in training, retraining and re-employment have thus far been at the core of Government's policy to promote upward mobility. However, the outcome of this policy needs to be evaluated in the context of global downward pressures on market wages, particularly for the lower income. One example is whether

existing retraining programmes can be expanded to assist workers to transit from sunset sectors to the new relevant ones.

Mr Speaker, Sir, while I applaud the many positives in this year's Budget, there is still always room for improvement as we continue to seek ways to enhance our social safety nets for the well-being of all Singaporeans. In order to "move as One Singapore", as the Prime Minister has said, and to build a resilient community - the topic of the Finance Minister's Budget speech this year, we must continually seek to evolve in our thinking and policies. I have today spoken about the challenges faced by lower income Singaporeans, the possible social ramifications and have, to that end, proposed a three-pronged approach centred upon the concept of human capital investments. I hope that the Finance Minister would consider my views in earnest, in his deliberations.

12.46 pm

Mr Ong Kian Min (Tampines): Mr Speaker, Sir, when the Minister for

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Finance announced the Budget for 2008, with its slew of goodies, I almost thought this was an election year!

The pro-people Budget is particularly crucial at this time for Singaporeans who are hard squeezed by costs that have risen on the back of three years of strong economic growth and for various external reasons beyond our control, as we enter a period of grave uncertainty in our external environment.

By sharing the nation's surplus through measures which include Growth Dividends for every adult Singaporean, the Government has tailored a bespoke package of goodies or benefits that will help the lower and middle income groups, the elderly and the needy. Even higher income taxpayers have not been left out, although they are somewhat disappointed that the top tier personal income tax rate was not reduced. One interesting consequence of the difference between the one-tier corporate tax rate of 18% and the personal income tax top bracket of 20% is that corporate dividends are no longer welcomed, and companies that declared good dividends recently were surprised to find their higher income shareholders selling their shares, as they did not want to pay the extra 2% personal tax on the dividends received.

Sir, this year's Budget demonstrates three salient qualities of our Government. The first is that our Government is responsive to the various issues affecting our people. Secondly, the Government believes in sharing. By being able to enjoy the surpluses distributed by the Government, we are assured of the Government's conviction in sharing the nation's prosperity with the citizens during good times, whether election year or not. Thirdly, we have a visionary leadership - our Government's far-sighted approach in stimulating our economic

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future through education and incentives for innovation and business competitiveness will stand us in good stead for the future.

I, therefore, applaud the first key thrust of the Budget - to provide a full range of education and training facilities and opportunities for students and working adults. Finance Minister has highlighted the role of education in the economic successes of cities with knowledge-based industries like Austin, Hyderabad and Kyoto. Similarly, a recent Straits Times article, entitled "Seattle sizzles", attributed the city's innovation culture to two factors - its dedication to the arts and education. As many are aware, Seattle is the home or origin of Microsoft, Amazon, Starbucks, Boeing and UPS. It is not surprising that Seattle tops the list of America's most educated cities, with more than half its population, 25 years and above, holding a Bachelor's Degree. Education at all levels will boost the strength and capability of our workforce. It is indeed a worthwhile investment.

However, if we just focus on education, and do not devote enough effort and resources into developing a first-class economy, Singapore will end up being no more than the training centre of the world where bright people come to Singapore to be educated and to get skilled, only to move on to benefit other economies which they perceive as greener pastures. If we have a first-class education system and do not have a first-class economy, our education institutions will become merely a temporary training centre for the world. Sir, in a February interview, MM Lee acknowledged that we have a serious brain-drain problem, losing at the top end, 1,000 Singaporeans a year to countries like America, Australia and Canada. He also said that many of the

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Chinese who come here, use us as a stepping stone to America.

Sir, how can we minimise the brain drain or even turn it around into a brain gain? We must find ways to retain our talents and attract new ones by making Singapore a country that people all over the world will clamour to live in - a city that is exciting and vibrant, socially and economically. This seems like a tall order to achieve but we are making headway in the direction of the arts, education, sports and finance. Many expatriates tell me how much they love the efficiency of our services and, yes, even our public transport system and how grateful they are for their personal safety. When my American friend from Houston, Texas told his friends back home that his 14-year-old daughter could go to the shopping mall in Singapore and take a bus or taxi back on her own, they were absolutely astonished. To them, that is so unreal.

But to truly qualify as a city that draws and keeps top quality talent, we need to have a top quality economy. Then, we will have more Singaporeans who will not want to leave Singapore, but more people who will return and more people will leave wherever they are and choose to come here because of Singapore being a greener pasture. The former Chinese Premier, Zhu Rongji, when asked in a forum whether he was concerned about the large number of Chinese students studying overseas and the risk of them not returning to China, confidently responded, "As long as there is business to be done in China, as long as there is money to be made in China, they will return."

Sir, talents are attracted and move to places where opportunities abound. In this respect, I support the direction set out by the Minister for Finance, to devote more resources to create a top quality economy by strengthening our role as a financial and business hub through tax

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refinements and generating new growth via incentives for innovation.

While the emphasis and assistance for innovation is laudable, my concern is about our mindset towards innovation. Minister Tharman is determined to make innovation pervasive in our economy. I am concerned how far this can be achieved in practice, unless we can change our risk-adverse mindset. Even in tenders for simple jobs like cleaning and landscaping in my town council, there is still a tendency for decision-makers to prefer the safer candidate and not face the risk of blame, nor have the hassle of damage control if the contractor does not perform. We need to groom and support innovative companies. But can we change our mindset and give start-ups a try, especially for non-mission critical jobs? We should strive towards a culture of innovation that permeates all levels of society across all ages. If we are keen on businesses to be innovative, we must start from the ground. For example, within organisations, will managers get rewarded if they take the risk to use a new technology or try a new method? Or will they be blamed if the new technology does not work out? We have to encourage big organisations to give untested newbies a chance. We need a change of thinking, to be open and fair to those who are innovative, who dare venture where others have not tread, or have not even thought of treading.

In 2003, after receiving proposals from various parties, including two entrepreneurs, Mr David Tan and Mr Felix Teo, who had lobbied hard for the idea, URA decided to run a trial scheme to allow mobile food vans to serve breakfast in certain car parks within the city area. But in the spirit of fairness and transparency, permits were allocated by way of ballot. No priority or recognition was given to those who had pushed passionately for the scheme. Neither was there any assessment of the applicants to

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select those who have the interest and who have the necessary experience. Most unfortunately, Mr Tan and Mr Teo did not succeed in the ballot and never got to take part in the idea that they had lobbied for. The project eventually dwindled off as the vendors gave up the business for various reasons. Sir, I often ask myself whether Mr Tan and Mr Teo would have made a decent success of the mobile breakfast business had they been given the first-mover advantage.

Sir, this year's Budget is a good one but we have to be mindful how our policies are applied to achieve their well-intended purpose and to benefit those in need. In trying to help those in need with schemes such as Workfare Bonus scheme and GST Offset, I would like to ask the Minister to reconsider the application of the criteria on housing type. I would like to cite the case of Mr Tan Choo Peng, a former resident in my area, who has fallen on hard times, facing financial difficulties, lost his home and is now bunking in with his brother who lives in a private property. Repeated appeals to CPF Board and MOF have produced the same rigid reply, and I quote, "we are unable to allot you a higher amount of GST Credits as we have to apply the rules consistently for all Singaporeans." While I agree with the general application of the housing type criteria, I would like to ask the Minister for Finance to allow the merits of each deserving case to be considered, to make sure that people in need do not fall through the gaps in our safety nets.

Sir, another issue of application is about our public housing policy and how we can help those who are middle-aged and from the lower-income group own or continue to own the roof over their heads and have a stake in our country's economic prosperity. Recently, HDB has taken a very tough stand on mortgage arrears. Just last night, at my Meet-the-People session, nine families approached me with letters from the HDB, threatening

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compulsory acquisition of their flats if they fail to settle their mortgage arrears. All of them are at a loss and desperate. They do not know what to do, where to live if their flat is repossessed. It is true that they can no longer afford the present flat they live in and they have financial difficulties in servicing their loans, but is compulsory acquisition of their home a solution to their woes? Sir, unlike other larger countries where poorer residents can choose to move to the slums, to the shanty towns or the kampungs, in Singapore, subsidised public housing is already the lowest cost option, and for a family that cannot afford public housing, what option do they have? Can HDB do more than just threaten, and I quote, "HDB will not hesitate to compulsorily acquire the flat if you are unable to work out a plan to resolve the mortgage arrears problem"?

Sir, with her permission, I would like to bring up the case of Mdm Judy Mitchell, living at Block 440, Tampines Street 43. Unless something is done, she and her family would not be living in that HDB flat for long. HDB has served notice to compulsorily acquire her flat. Why? Because at the time of service of notice, she was in arrears of $10,353.19 (that is equal to 5.9 months of mortgage loan payment) and lift upgrading cost arrears of $18 (that is unpaid for two months). I have appealed for her a number of times, but HDB has rejected granting her temporary relief. She has to settle her arrears and pay the stipulated monthly mortgage loan payments or HDB will compulsorily acquire her flat.

But let us pause and consider her situation. Mdm Judy is trying her utmost. She is of good health and gainfully employed by an Australian company in Singapore with high chances of job continuity and salary increments. Her only daughter, who has started working

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as an air stewardess, is living with her. Together, she and her daughter are supporting her elderly mother who is close to 80 years old. HDB advised her to sell her flat but this option is not practical because the proceeds from the sale of her current flat will not be sufficient for her to purchase a smaller flat and, most probably, she will not be able to get a loan from HDB or a commercial bank due to her age. Where can her family live? She will only be eligible to rent an HDB flat 18 months after the sale and then there is a waiting time for rental flats.

Sir, I cannot imagine in Singapore, where we pride ourselves in our home ownership policy, that a family of two working adults supporting one elderly family member would have their HDB flat repossessed and be left homeless. Sir, what is our social compact?

There are those among us, like Mdm Judy Mitchell, who are trying their best, working hard, wanting to be self-reliant. They might have made a mistake in the past in buying a flat they could no longer afford. I believe the Government should step in and give them a helping hand.

Sir, in conclusion, I would like to say that our Budget this year has made a few regional countries sit up and take notice of its progressive nature. They wish they could achieve similar results, offer similar benefits to their people. At home, it has affirmed the people's confidence that we have a capable Government with a heart. May Budget 2008 be implemented as skilfully as it is balanced so as to achieve its goals to the fullest.

I support the Budget Statement.

1.00 pm

Ms Sylvia Lim (Non-Constituency Member): Mr Speaker, Sir, I will first say a few words in Mandarin and then continue in English.

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( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, during last year's Budget debate, the Workers' Party asked the Government why it was necessary to increase GST by 2%. We had believed that the Government’s sources of revenue would be able to fund the expenditure. At that time, I had asked whether corporate tax cut would result in revenue lost, as the Government claimed, because the experience of other countries showed that such corporate tax cuts are economically stimulative in nature, resulting in more business activities which would yield higher tax collections. With the recovery of the property market, it is also likely that stamp duty collections would increase for the Government. So, it is not necessary for the Government to increase GST by 2% last year. The projected $0.7 billion deficit has become a $6.4 billion surplus. Therefore, with enough sources to fund the expenditure, I feel that the GST hike was probably not needed as it would add on to the burden of our people.

*Cols. 881-882.

( In English ): In last year's Budget debate, the Workers' Party was criticised for asking the question of whether the GST hike of 2% was needed in the first place. We had highlighted that, according to the Government's own estimates for FY07, there would be enough alternative sources of revenue to fund the additional social spending of $2 billion-$4 billion per year.

At last year's Budget debate, I had pointed out that based on the Government's estimates for FY07, increases were already projected in personal income tax and statutory board contributions. I noted that it was also likely that stamp duty collections would rise due to the recovery of property market. The prospect of the Constitutional amendment to broaden the definition of "Net Investment Income", or NII, would also yield additional funds. I had asked if

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the corporate tax cut would result in revenue loss of $700 million, as the Government claimed, because the experience elsewhere showed that such cuts "paid for themselves", as they were stimulative in nature, resulting in more business activities which would yield higher tax collections. The question of whether land sales should be included as revenue to fund expenditure was also raised.

In short, the indications were already there last year that the GST hike was probably not needed.

Today, we see that the Government's estimates can hardly be called "estimates"! The Government coffers are bulging at an estimated $6.4 billion surpluses, revised from a deficit of $0.7 billion projected last year. That is off by more than $7 billion. Indeed, commentators have noted that the surplus estimate of $6.4 billion is still a provisional figure, which will only be finalised after FY07 ends, in other words, after March 2008. There is expectation that the surplus would "almost certainly" be more than that. This is because the Government has provided for a large deficit for the final quarter of FY07 which, in their view, is probably an over-provision. It should also be noted that the overall budget surplus was achieved without the benefit of the broadened NII definition, which is still not ready. Neither does it include land sales which, in FY07, was a whopping $10.5 billion.

Sir, leaving aside the higher than projected GST collections, significant under-projections were seen in corporate income tax, personal income tax, statutory board contributions, asset taxes and stamp duty. Without the additional 2% GST, conservatively, the surplus would still have been about $4 billion.

In a Citigroup report released on 28th January, Citigroup economist, Mr Kit Wei

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Zheng, noted euphemistically that "the fiscal year 2007 assumptions were overly conservative". He went further, "In hindsight, the GST hike may have been unnecessary or could have been delayed or staggered ... the GST hike has contributed to the unexpected bulge in Government revenues, while exacerbating inflation pressures." Finally, Mr Kit expected that the Government would probably not reverse the GST hike in any way "as it would be tantamount to admission of a mistake".

Sir, both the Prime Minister and the Finance Minister have cited three reasons for the rising inflation. Global price hikes in good and oil was only one of the three reasons. The other reasons cited were the hike in GST and the revision of annual values of HDB flats. Both these reasons were not external but were the Government's policies.

Sir, with the prices of food, transport and other essentials rising, Singaporeans have found that the addition of increased GST has had exponential effects. Adding on another 2% on a higher base price has increased the cost of some items by more than 20%. Only very few people's incomes have risen by 20% since last year.

Sir, going forward, should GST be at 7% in the coming years? We must assess whether there is a need and the impact on the people. Here, we come again to the Government's budgeting policies and practices.

For FY08, the Government has once again projected a deficit of about $0.8 billion. In a commentary in the Business Times Weekend Edition of 16th February 2008, Chief Economist at Daiwa Institute of Research (Singapore), Mr P K Basu, wrote a commentary entitled "Deficit Next Year? Just Don't Bet On It". It was

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observed that Singapore's budgetary accounting system is among the most conservative in the world, as the fiscal balance is obtained by subtracting both operating and development expenditure from the Government's operating revenue alone. The Government's ample investment income is not counted as Government revenue, though in recent years, it has made a "small concession" by using up to 50% of investment income to fund special transfers. The writer also notes that since the Government is starting FY08 with a larger surplus as a base, next year's fiscal balance will also be stronger, assuming budgeted increases in revenue and expenditure. Coming back to his initial question of whether there would actually be a deficit in FY08, he writes: "A betting man could do worse than place a large wager on actual revenues comfortably exceeding the Budget's projections next year too!"

Sir, I note that there are signs that the Government expects the economy to still do well in FY08. It has projected increases in statutory board contributions and personal income tax. It has even projected an increase in corporate tax collections, when the cut in corporate tax is supposed to have kicked in. It also expects strong collections from land sales, projecting land sale receipts to be nearly $10 billion.

Sir, I think it is quite clear that the Government has chosen to raise GST from 5% to 7% last July without compelling reasons, and this increase has compounded the inflation pressures on the people. Given that the increase was not necessary, the Government should do the following to alleviate the suffering of the people:

(1) Reverse the GST rate back to 5%;

(2) Additionally, since food inflation is exceptionally high, zero-rate GST on

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essential food as other countries have done.

Sir, if the Government did these, the people would appreciate it. They would be better off than having to live with ever increasing prices, long after the one-off giveaways have been spent.

Mr Yeo Guat Kwang (Aljunied): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] After the Finance Minister announced the Budget Statement, we have heard many views from the Members specifically, opinions that represent the views and interest of the unions. Mr Low Thia Khiang gave his personal views yesterday, and today we have heard from one of the leaders of the labour movement. It reminded me of something, and now I would like to share a story from the famous Chinese ancient thinker Zhuang Zi . The story goes like this. One day, a scholar was walking on the street when he spotted a fish in a very small puddle of water on the ground. The ground was sunken caused by the pressure of vehicle tyres, and the fish was struggling to survive in the puddle. So the fish said, “Please, save me, give me all your water!” And the scholar replied, “This is not a feasible solution. Please wait for me. I will go to the East China Sea, construct a canal and divert the water here, so that you will be able to live happily ever after. ” Of course, the fish knows it will not survive.

Let me share with Members the contemporary version of this story. One day, Mr Lim was walking along the street when he came across the same fish in the puddle. Mr Lim said to the fish, “Oh, fish, I am from the labour movement. I shall give you some water to save you first, but please follow me so that I could help and teach you to rely on your own efforts to earn your living. Even if I give you all the water now, you will still not survive because you are trapped here. So why not follow me? I have PAP programmes

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and all sorts of programmes and measures that can help you. But, most importantly, we want to find a solution so that we can help more fishes like you.” So, this is a lucky fish.

But there is another fish that is not so lucky. The second fish met Ms Lim. Ms Lim said, “Oh, fish, I am from the Workers’ Party, I don’t have any water to offer you, but I empathise with your plight from the bottom of my heart. Your government has not taken good care of you; I shall shout and scream until your government releases the water from the state dam to save you. I will also make sure that the whole world can hear your moans.” Having said that, she sighed in despair and left. The fish was dying. She went around telling everyone about the story of this poor fish, and how ungenerous this government was, but the fish was already dead and has become dried fish in the market. From this contemporary version of the story, I hope that everyone will be able to see the true principles of this year’s Budget, and the true meaning and intention behind this Budget.

Firstly, we can see that almost everyone will get a hongbao, and everyone will have a job. Like the verse goes, " Cai zheng yu suan zen me kan? Hongbao bu shi wan ling dan. Ni wo da jia you gong zuo, ri chang sheng huo cai wen dang. " ( 财政预算怎么看？红包不是万灵丹。你我大家有工作，日常生活才稳当。)This means“How do we look at this year’s Budget? It is not a cure-all pill for Singaporeans. If everyone has a job, then we will not have problem earning a living.” With globalisation and rising cost of living, the Finance Minister has announced a $1.8 billion surplus sharing package, Growth Dividends and rebates for all Singaporeans, to help the people cope with rising cost of living. In this year’s Budget, the Government will adopt policies to maintain its economic competitiveness and invest heavily in

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manpower development. These components are critical to our economy. Regardless of the size of the hongbao, the people will never feel content. So the most important thing is to ensure that we achieve sustainable economic growth, full employment, and that every Singaporean can have a stable job and income.

In this year’s Budget, we can see that the Government has taken into consideration the voices of the middle-income group. For the middle-income families, the Government will be giving them assistance package that is equivalent to one month of their income. But some of them feel that it is not enough, because the Government is only helping them for one month out of 12 months in a year. It is not so. One out of 12 means 8%. If your monthly income is $3,000, then the Government is helping you to cope with 8% increase in the cost of living. But, for the middle-income group, I feel that the size of the h ongbao is not so important to them. Rather, the best welfare will be for the Government to commit in three areas, namely, steady economic growth, stable and harmonious society, and job security. The Government should ensure that wages rise at a rate in accordance with economic growth. This will be more meaningful than giving them h ongba o. Therefore, the resources should be allocated in these areas. In this regard, I am happy to note that the MOM’s budget has increased by twice the amount compared to last year’s Budget.

I agree that t hose high-income groups, the top 20% income earners, should also be getting something. It is necessary for the Government to recognise the contribution of all Singaporeans. Those whose annual income is more than $100,000 will also get something, about $100 Growth Dividends. But I urge that the Government reconsider the

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distribution method. Rather than granting the high-income earners the Growth Dividend automatically, we can consider an “opt-in” for the Growth Dividend, using the same framework that has been used for GST credits. If they do not “opt-in”, then this money can be donated to the ComCare Fund or a social welfare fund. This way, those who are not in need of this money can choose not to “opt-in” and the money can be given to help those poor and needy people.

Secondly, besides giving h ongbao to the people, Singaporeans must also be responsible. When I attended the 95.8 radio show to discuss the Budget, a lady listener made a strong impression. This lady, Mdm Guan, told me that she is happy to know that almost everyone will get some money. But, more importantly, in the midst of rising cost of living, every family should bear in mind to keep expenditure within the limits of the household income. They should be frugal and thrifty in managing their household expenditures. No matter how much rebates the Government is planning to give each of us, it can only help us in the short term. Therefore, we should also draw our own budget and look at our own income to see how much we are allowed to spend. And we should save as much as we can. I feel that what this listener said is quite correct, and we should give a thought to it. The Government can only help those who are needy to cope with the rising high cost of living. It is not right for the people to expect the Government to take over the burden of a higher cost of living.

Thirdly, besides having enough savings, every Singaporean should be covered under the CPF scheme. Let me give an example using this verse, " Ren ren you qian na, hua wan zen me ban? Ren ren you jin shou, lao le bu yong chou" ( 人人有钱拿，花完怎么办？人人有金手，老了不用愁。). This means “Everybody will get some money, but what should we do

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after all money is spent? But if everyone is well protected by the CPF scheme, then you will grow old without worries.” Today, the people feel that the CPF is an important safety net for all Singaporeans, be it saving for retirement, buying a HDB flat or using CPF for medical fees. Therefore, I feel that the CPF coverage must be comprehensive and the people should be covered by the CPF safety net. Everyone should be included under the CPF scheme.

Last week, the media reported that about 30% of women, aged between 44 and 61 years old, have never stepped into the workforce. They have no CPF accounts. Some left the workforce because they wanted to take care of their children and families, and so they do not have sufficient CPF savings. Therefore, besides topping up the Medisave accounts of those Singaporeans aged 51 years and above, the Finance Minister should also consider giving CPF top-ups to women who are 45 and above. And for those womenfolk without CPF accounts, the Government should put in place some incentive to encourage them to open a CPF account. This will allow their husbands to top up their wives’ CPF accounts, and families to top up their CPF accounts. So, when there is a surplus, the Government can also give them CPF top-ups. Therefore, all Singaporeans, regardless of male or female workers, should be covered under MediShield and the Workfare Income Supplement scheme, so that they are protected when they fall sick.

Fourthly, the Government has invested heavily in education and manpower development. I am happy to note that the Government has focused primarily on manpower development to achieve sustainable economic growth in the long term. So, the Government has allocated more funds to promote lifelong learning, and to give out bursaries for tertiary and arts students. However, the Government

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should also look into funding the preschool education. Today, our preschool education is still not considered as part of the mainstream school system. I hope that the Government can consider investing in our preschool education so that our young can receive quality preschool education. Singapore is facing a shrinking and ageing population. Every year, there are only 35,000 newborn babies. Singapore has no natural resources, and the only resource we have are people. Therefore, we must make full use of our human resource so that every Singaporean can achieve his fullest potential in life. As we know, the ages between three and seven years are a critical period for the child in developing the brain and intelligence, and if the Government can provide more funding for quality preschool education, this will set a good foundation for their future. I feel that the Government is not doing enough in this area and, as such, I hope to see more funding for preschool education.

Fifthly, besides helping the people with basic necessities in life, the Government should also help people to stay healthy as they age. In terms of basic necessities, such as clothing and food, the Government has put in great efforts over the years in looking after the people to make sure that the cost of living can be contained. At the same time, the Government has adopted a multi-pronged approach to stabilise food prices and to increase supply of basic necessities. Also, the Government will give out allowances and rebates to offset the increase in the cost of living due to accelerated inflation.

As for housing and transportation, I hope that the Government can allow more flexibility in these two areas. Currently, people are given two chances to purchase HDB flats. But they are only allowed to upgrade and not to downgrade. Why is this so? This means that when the people buy a second HDB flat, it has to be a

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bigger flat. They are not allowed to sell off their big flats and buy a small one. For those people who cannot afford to live in a big flat now due to financial constraints, the Government should look into ways to help them, and allow them to downgrade to a smaller flat. Under certain circumstances, these people should be allowed not only to upgrade but also downgrade. More importantly, HDB should always bear in mind its mandate, which is to help Singaporean families own their flats, so that everyone will be able to afford public housing “g ong gong zhu wu" ( 公共住屋), not “g ong gong zhu wu" ( 宫共住屋), which means expensive housing. Therefore, HDB's objective is to provide affordable housing, and not expensive housing.

In terms of transportation, I am glad to note that the Government has allocated $50 billion to improve our transport system. However, with Government’s announcement on major initiatives to improve the public transport system, the people are also concerned with higher ERP charges. Under the public transport master plan, the Government aims to achieve the vision of seamless connection, with the MRT stations and bus system interconnecting with each other and allowing commuters to transfer seamlessly between the rail and bus systems. We should make sure that the bus operators can make it convenient for the people to transfer effortlessly via different modes of public transport, so that they can arrive at their destination faster with less effort. Currently, many workers have to spend more than one hour on the road before they reach their workplace. If only we can improve the travelling time for public transport, we can dissuade people from using their cars.

Besides rising cost of living, the problem of the aged is another main concern of Singaporeans. As they say, if

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you have the ability to work till an old age, you are considered bao ( 宝), which means useful. But, if you do not have the ability to work till an old age, you are regarded as cao ( 草), which means worthless, it is very sad. In order to improve the ability to work, I am glad to note that in the Budget, we have more provision for lifelong learning, encouraging people to learn and enhance their ability to earn and live so that the elderly can stay healthy as they grow old and they can achieve higher productivity and job security.

When a person gets old, other than job security, the other concern is health costs. As we know, the MediShield Plus will be enhanced to cover 80% of the hospitalisation costs. I hope the Ministry of Health will further strengthen the MediShield scheme. The Government should also provide more funding for preventive health care. This is because prevention is better than cure, so that every person will remain healthy as he gets older. It is better than providing greater medical subsidies.

I notice that recently in China, the government has implemented a new initiative called the “ Zhi Wei Bing” programme ( 治未病计划), which means to tackle problems of the future, a disease of the future, not disease of the stomach. So we should earnestly explore how to prevent people from getting sick and being admitted into hospitals. That is the best approach. Similarly, if you look at our Fire Department, their strategies have shifted from adopting a fire-fighting approach to a preventive approach. Our fire stations are not only concerned with fighting fire but preventing fire.

Sixthly, the CPF LIFE scheme. In this year’s Budget, the Government has implemented the new lifelong income scheme. This is very timely. The lifelong income allows our people over 65 years old to withdraw a certain sum of money

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every month to provide for their daily needs. The monthly amount will be about $540 to $650 or more. We have to use a simpler example to make it easier for the people to understand. With this CPF LIFE scheme, the Government is using the CPF interest to finance the scheme. It is also equivalent to saying that those over 65 years old will strike a third prize in the 4D lottery draw every month. It can also be equivalent to getting a consolation or a smaller prize every week. This will allow them to have a better life in their old age. Although this scheme is good, many people do not understand it. Many of our grassroots leaders, friends and the people that I meet at dinners, including those highly educated professionals, do not understand what it is all about. So, I hope that the Government will improve the publicity campaign and make it easier for people to understand how this scheme is going to help them in old age.

Seventhly, I will talk about the company’s health care provision and personal health care and I would like to continue to use English for the rest of my speech.

*Cols. 883-892.

( In English ): As lifelong employment is no longer prevalent in view of the changing employment trends, working Singaporeans need an integrated portable medical benefits scheme that builds upon our MediShield plan.

To build on our existing healthcare financing framework, we should encourage all working Singaporeans to consider taking up private enhanced shield plan and rider. This will ensure that Singaporeans will not be dependent or shortchanged by the loss of company-based group hospitalisation and surgical insurance schemes that are only in force if the individuals remain in the company. As they change jobs, they will lose the coverage.

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Therefore, among the many hong baos and incentives that are announced by the Minister for Finance, I am particularly happy that the Government is extending the tax deduction limits beyond the current 1% of total remuneration to facilitate portability of medical benefits for all employees and help workers to cope with rising medical costs.

With effect from the Year of Assessment 2008, the current tax deduction limits for medical benefits expenditures will be extended up to 2% of the total wage bill for companies that provide their employees with in-patient medical benefits through portable medical shield plans, either by paying the insurance premiums on behalf of the employees to the insurance companies directly or by reimbursing the premiums into the employees' Medisave accounts or by making an adhoc contribution to their employees' Medisave account. I think this is very good news and this is what the labour movement and their tripartite partners have been asking for.

I hope all employers in Singapore will take advantage of this tax incentive and convert immediately, or as soon as possible, their existing company-based group hospitalisation medical benefits to the portable MediShield-based medical benefits for all our workers.

Sir, I support the Bill.

1.30 pm

Er Lee Bee Wah (Ang Mo Kio): ( In Malay ): [For vernacular speech, please refer to Appendix A.] This year's Budget is a surprising revelation for Singaporeans. It comprises many beneficial components beyond our expectations. The Budget is indeed pro-people. Most components of this Budget are specifically aimed to give the people an advantage. So I applaud the Minister for Finance, Mr Tharman Shanmugaratnam, for his vision and high aspirations in this year's Budget.

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For a number of years, the Budget has been focused on the lower-income group. This year, we are going further by including the middle income as well. The middle-income group will receive a number of bonuses, such as the 20% income tax rebate, higher education bursaries, Post-Secondary Education Account and Growth Dividends to cope with inflation.

The Government has shown its generosity with an increase of more than 10% for Public Assistance recipients. I have no doubt that this assistance will improve their quality of life.

*Cols. 893-894.

( In English ): Many Singaporeans are happy that estate duty has now been put to rest. I applaud the Government for having the courage to take this long-awaited step. It represents yet another stride in our departure from tradition.

Having estate duty in our economic climate is not conducive to free-flowing business. Now that it has been removed, more individuals - especially those who have high personal net worth - will be encouraged to live and invest in Singapore.

Another piece of particularly good news is the increase in amounts for both tertiary education bursaries and also Post-Secondary Education Accounts. I strongly believe that education is the best long-term investment strategy as it helps to put together a solid and enterprising workforce, which is integral to the success of any country. Education is also the best solution for children from lower-income families to escape the cycle of poverty and create a better future for themselves and their loved ones.

Other developments that will breed achievements are the tax deduction and allowances on research and

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developmental activities. I am optimistic that such a move will drive more local companies to channel more resources on R&D.

It is a wise move as Singapore is a country that thrives on advancement through brain power, be it in technology or other areas. Thus, we are helping to stimulate further growth for our country by instituting this move.

With that said, this year's Budget has accomplished many great feats. Yet, as always, I am looking forward to some adjustments so that it can be even more effective.

The Government could, for example, consider making the income tax rebate a continual feature of the annual budget, not just one-off. It could be better perhaps to institute a cut in the income tax rates. I feel that this is a better permanent solution as it will help Singaporeans cope with the rising cost of living. A cut in personal income tax rates will give them a more direct dosage of medicine to deal with inflation and this can in turn help to stimulate the economy further. Lower income tax rates will also attract individuals to work here, rather than in other places like Hong Kong, where the top marginal personal tax rate is 15%, compared to ours at 20%.

Mr Speaker, Sir, please allow me to continue my speech in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] According to a report by MCYS, it indicates that our womenfolk live longer than their male spouses. This is a challenge to the elderly womenfolk. When I walk around my constituency, I often meet women who had never worked in their lives. Once their male spouses have passed away, they are not able to maintain their livelihood. These women, if they are lucky, will be able to get some support

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from their children. Their CPF account is as empty as their life. Although we stress the importance of retraining, but due to the lack of education and being physically weak, many elderly women are not able to take on full-time or part-time jobs. And these women spend most of their time looking after their parents, their family members, their husbands and children. They have made tremendous sacrifice for their families. However, at the end of the day, they have nothing in their CPF accounts. Therefore, they are not eligible for the CPF LIFE scheme.

How many husbands and children will top up the CPF account for these women? Women live longer and, therefore, there is a greater need for them to be included under the CPF LIFE scheme so that they have enough income for their retirement. At present, the Government has no policy to look after these women. I would like to know whether the Government can help this group of women to be eligible for the CPF LIFE scheme.

In a recent report by the Chinese Chamber of Commerce on 76 SME companies, 85% of the respondents said that they are quite apprehensive about the uncertainty in the economic climate. 40% of them hope that the Government will help them to adjust to the present condition by reducing corporate tax, worker levy and fees so that this can lessen the impact of high wages and high cost of fuel. Our SMEs are more closely connected to the performance of our economy than the big MNCs. According to a report, 99% of our economic entities are made up of SMEs and they account for 62% of the workforce, and they contribute 46% to our GDP. Therefore, I feel that the Government should help our local companies in order for them to develop and grow. I would like to propose three suggestions.

Firstly, rental of office and factory space. Some businessmen told me that

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JTC has increased their rental by 42%. Besides coping with business cost due to external factors, they have to deal with high JTC rental. Is there a need for this? Is JTC rushing their report card for the next annual report? There is a saying that goes like this, “The wool comes from a sheep.” In order to enhance their competitiveness, certain companies may adopt certain negative measures, for example, laying off staff or relocating their operational headquarters out of Singapore. This will have a great impact on our employment situation. As the former US Secretary of Defence, Donald Rumsfeld said, when dealing with matters, we should think three times, not twice. We should not allow trivial matters to interfere with our plans. The Government should deal with matters from a macro perspective.

Secondly, Government's policies and requirements. Yesterday, Mr Inderjit Singh said that certain Government regulations have increased the cost of doing business in Singapore. Let me give you some examples. As a professional engineer, let me first declare my interest. Ever since the collapse of the Nicoll Highway, BCA has launched a spate of measures, despite protests from the industry and these measures are controversial in nature. For instance, the law states that for buildings which are more than 30 storeys, the foundation work has to be designed by a soil engineer, which was originally done by a civil engineer. Contractors have told me that underground digging should be done with special permits and there should be five signatures, including those by the contractors, LTA, professional engineers and worksite quality supervisor. Five persons’ approval before such things can be carried out. Will this entail a greater amount of manpower resources and time? Before formulating or carrying out any regulations, the Government should listen to the views of the industry so that the rules and regulations are made to provide flexibility for the BCA workers.

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Thirdly, shortage of workers. Recently, many entrepreneurs and businessmen told me that they face a shortage of workers. I urge the Ministry of Manpower to review the quota on foreign workers. At present, more than half of our labour force are aged 40 years and above. With the greying of our population, this problem has become more serious. Therefore, it is necessary to review the cap for the employment of foreign workers. If we do not look at this problem seriously, industries which are facing shortage of workers will adopt other measures to attract people and this will result in adverse competition. This will also result in a lowering of service standards.

When the Integrated Resorts start operations, more people will be required to work in these places. And there is a question of whether foreign workers will take away the jobs of Singaporeans. It is only when we cannot find local people to fill these job vacancies should we resort to employing foreign workers.

Every year, I visit my mother three or four times. Whenever I visit her, we will go to a coffeeshop to have a bowl of niang dou fu ( 酿豆腐). After the meal, I will take out a 10 ringgit note and I will get some change. Last December, I did the same thing. I went to the same coffeshop to have a meal there. After the meal, I paid 10 ringgit to the owner of the shop and the lady told me, "The full cost is $15. Don't you know that food prices have gone up?" I wanted to ask her, "Has your Government increased the GST?" When we talk about the Budget surpluses, we should congratulate our Government. Because of the judicious leadership of the Government and the far-sighted policies adopted by our Government, we have been able to attract investments from abroad. We have to

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thank the Government for its willingness to share the surplus with the people.

Why is our Government able to turn a deficit into surplus? We do not have any black gold underground. What we depend upon is one principle – a prudent and practical approach. Because of this approach – prudent and cautious - we were able to weather the financial crisis. We need not beg other people to help us. I remember my mother used to tell me, "If you make $1 but spend $2, you cannot get a wife in future." So, if you make $1, and you spend $2, when you are old, you will have nothing to fall back on.

*Cols. 895-898.

( In English ): Mr Speaker, Sir, in closing, I congratulate the Finance Minister once more on his insight and pragmatism in rolling out this bountiful Budget. Indeed, the drawn-up plan is both timely and relevant.

In reflection, allow me to share with you a thought-inspiring quote from Antoine de Saint-Exupery, the famed author of "The Little Prince". He said, "As for the future, your task is not to foresee it, but to enable it."

I think, we are well on our way to abling that.

1.48 pm

Mr Edwin Khew Teck Fook (Nominated Member): Mr Speaker, Sir, thank you for allowing me to speak in this Budget debate.

In my speech this afternoon, I would like to focus on two points relating to the Budget: (1) feedback from post-Budget surveys carried out by the Singapore Business Federation (SBF) and the Singapore Manufacturers' Association (SMA), and (2) feedback from members of the Sustainable Energy Association of Singapore (SEAS).

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Before I share with the House on these two points, I would like to applaud the Finance Minister for presenting a well-balanced "people's Budget" that will benefit most Singaporeans, particularly the lower and middle-income groups and, of course, older Singaporeans.

Sir, the surveys carried out by the Singapore Business Federation and the Singapore Manufacturers' Association on this year's Budget did not reflect the same exuberance compared to last year's survey and feedback sessions. Although some praise the Government's long-term initiatives to support innovation and encourage start-ups and R&D, many were disappointed that the Government has not addressed the high cost of doing business in Singapore in areas like rentals, labour, housing, transportation. They feel that the Finance Minister should have provided some immediate relief to help the many businesses tide over this difficult period where operating costs have increased too quickly and beyond the expectations of many businesses. The SMEs, in particular, have been more adversely affected.

Many more are concerned that the situation will get worse before it gets better, as the recession and the sub-prime situation in the US set in. As such, they are hopeful that, as in past years, the Finance Minister will provide off-Budget measures to help businesses ease the difficult situation that they are currently experiencing, and they feel, will only get worse.

Sir, I move my focus now to another area that was not covered by the Budget. This relates to the green and other incentives for businesses and, more particularly, the sustainable energy companies that have, over the last couple of years, set up business in Singapore. I have received considerable feedback from members of the Sustainable Energy Association of Singapore (SEAS), which I chair. At this point, Sir, I would like to

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also declare my interest, as I run a company which is in the waste recycling and the generation of renewable energy.

Sir, the feedback that I received includes:

(1) The general lack of green incentives except for the R&D incentives, which many felt they could not benefit from, either because they are pioneer status companies or they are not profitable as yet. There are no incentives for companies that seek to improve the environment. This relates to companies that seek to green their operations or companies that focus on making the environment their business.

(2) Start-up companies that are doing R&D appreciate the $20,000 cash grant but feel it is not sufficient to help them in their cash flow.

(3) There is no mention of Government support or initiatives for the sustainable energy sector after a positive momentum forward in 2007.

Sir, I will elaborate on this third point. After Singapore acceded to the Kyoto Protocol in February 2006, the Singapore Government moved rapidly in 2007 to signal positively to the world that Singapore wanted to be a clean energy hub. This momentum started from the 2007 Budget Statement where the Finance Minister, then Second Minister for Finance, stated that "Singapore will seek to participate in alternative energy which is an emerging growth industry." He further quoted a global market of US$300 billion by 2015.

In my maiden speech at last year's Budget debate, I applauded the Minister for recognising that Singapore will position itself to ride the wave of alternative energy technology and urged him and the Government to set up a central agency with some teeth to

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spearhead and come out with policies to attract foreign SMEs and MNCs who are in the value chain in this alternative sustainable energy sector to come and set up a base in Singapore.

Sir, the whole energy sector was delighted when the Government started the multi-agency Clean Energy Programme Office (CEPO), and elevated clean energy as a key growth sector for Singapore. In 2007, the Government also (1) invested up to $350 million into clean energy R&D; (2) started the Energy Efficiency Programme Office; and (3) just last week launched the Solar Energy Research Institute.

Sir, what escalated the feeling of exuberance from the sector was the Prime Minister taking the chair of ASEAN and leading all ASEAN countries into adopting the Singapore Declaration on Climate Change, Energy and the Environment and the ASEAN Declaration of Environmental Sustainability in November 2007.

The year 2007 ended with much jubilation on Singapore's clean energy aspirations to lead in this sector, when the Prime Minister attended the UNFCCC Conference in Bali and, at that conference, strongly declared to the world that Singapore will support research efforts on climate change, sustainable energy technologies and the Bali Roadmap.

Sir, what the Government had done in 2007 must be applauded. It was extremely important in developing Singapore into a clean energy hub. We have managed to attract REC, the largest integrated solar cell manufacturer in the world, who will be investing approximately S$6 billion into a manufacturing facility in Singapore. But there are many more companies which are considering Singapore as a base for Asia,

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but have yet not committed. We should not be complacent and lose the momentum that we started in 2007.

There is still much that needs to be done for Singapore to be recognised as a clean energy hub. Many countries also recognise that this sector is very lucrative and we therefore have considerable competition. Examples are:

(a) Abu Dhabi recently launched the Masdar initiative - a US$15 billion budget committed to renewable energy, the world's first carbon neutral city, and a global research network. They will break ground this month. Some parts of the initiative will be ready by 2009.

(b) Closer to home, Australia, South Korea, India, Malaysia and China have announced aggressive initiatives to attract renewable energy companies and investment into their countries. They have not the holistic approach initiated by Singapore and Abu Dhabi, but we cannot be complacent.

Sir, Singapore is in a good position to be a hub for clean energy. We have the infrastructure. Let me name a few - many R&D institutions; we are a major financial centre; a major trading centre for oil and gas, which provides a natural base for carbon trading; well-trained technical population; a safe centre for intellectual property; high-tech manufacturing centre for many of the components required for clean energy systems integration, etc. Most importantly, the Government and private sector in Singapore are in sync.

Sir, the world needs to know and be constantly reminded that Singapore will be a centre of excellence, solutions, project financing, carbon trading and a perfect model of a sustainable city with sustainable development as its master plan. We should aggressively promote our intentions and, more importantly, walk the talk. We have done that for water.

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Let us do the same for clean energy. I therefore ask the Finance Minister to provide a budget to get Singapore there. Abu Dhabi is prepared to spend US$15 billion and have set a benchmark. What are we, as Singapore, prepared to spend?

Minister Mentor Lee, when he was Prime Minister, decided to make Singapore a Garden City with the best environment in the whole region. Senior Minister Goh, as Prime Minister, took it further, moving it from a Garden City to a City in a Garden. Now, just last month, the Prime Minister announced, at the sidelines of the World Economic Forum in Davos, that we aim to be a Sustainable City. An Inter-Ministerial Committee on Sustainable Development was set up. PM emphasised that sustainable development will continue to be a priority for Singapore going forward, and that we will "seek to build new

competencies and facilitate mind-share across the public, private and people sectors to develop Singapore as an "Eco-Hub". We applaud these initiatives. Let us implement these objectives together.

To develop Singapore as an "Eco-Hub", we must promote and establish an environment for alternative energy, energy efficiency and other green businesses and initiatives to flourish. We are helping China build an Eco-City in Tianjin. Let us be an Eco-City ourselves.

I therefore implore the Finance Minister to consider investing in this sector, looking at the long-term gains for Singaporeans and Singapore. We have the lead in this sector at the moment. Let us not lose it.

Finally, Sir, I support the motion to adopt the Budget.

2.00 pm

Ms Denise Phua Lay Peng (Jalan Besar): Mr Speaker, Sir, like several other

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Members of the House, I share the same concern over the lack of what NMP Ms Olsen calls "budget marksmanship" of Government. Certainly, a variance of $7.1 billion is not easy to explain away. Thankfully, the variance leans towards the positive side and we now have a happy problem of a substantial Budget surplus.

However, I urge our civil servants not to over-compensate in the face of this allegation of forecasting inaccuracy and adopt a knee-jerk reaction of now rigidly sticking to an outdated Budget even if there are reasons to change it in the course of the year. The Government Budget is after all an accumulation of the budgets and plans of different Government Ministries which all have differing financial proficiencies and operating environments. Singapore is an integral member of a dynamic global economy. We are not cocooned in a silo - how would we know that we would bag the bid for Youth Olympics last week? Does it mean we cannot now factor the fiscal impact of that successful bid into the Budget? Government must not react with a knee-jerk reaction to preserve Budget forecasting accuracy for accuracy sake.

Nonetheless, Sir, I would like to suggest, like major corporations, for Government to consider releasing of more regular financial results and KPI performances of each Ministry. Where necessary, like the corporations, issue surplus or deficit warnings so that Singaporeans understand better the context for major national policies and are less surprised at the end of the fiscal year. It also reduces the hype surrounding the annual Budget and minimises any unrealistic "goodie bag" expectations.

In addition, good forecasting is not just about financials. Because we operate in an eco-system in which one part affects the other parts of the system, the

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Government needs to also exercise rigour in forecasting the impact of one Ministry's policies on the others, and the non-financial impact of its actions. For example, in outperforming the KPI of the number of jobs created by the Manpower Ministry, there is a corresponding need to forecast the pressure that success adds to the current transport, recreational and accommodation needs of the foreigners needed to fill the gap of unfulfilled jobs.

Sir, on a positive note, the unexpected FY2008 Budget surplus does provide Government the means to further both immediate and longer-term goals of our country.

I would like to ask the Government to consider measures that are within its control to address the needs of specific segments of the population. This is against the backdrop of alarming inflation or, worse still, a stagflation - rising inflation in a potential economic slowdown.

Sir, on the special needs community . The special needs or disabled community appears to have been forgotten in this Budget. The problems faced by the average citizen are magnified in the lives of those with disabilities. Many moderately to severely disabled citizens are already facing discrimination and difficulties in the areas of education, healthcare and employment. Not only are early intervention and education support expensive for the younger ones, those who are older are themselves affected by rising costs in basic essentials, transport, healthcare and potential displacement by lower-cost and able-bodied foreign talents.

In basic healthcare, children with special needs are excluded from national healthcare schemes for medical problems arising from their disabilities. In

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employment, even our capable people's union - the NTUC - does not consider the disabled workforce a priority to represent.

I urge the Minister for Finance, especially during Budget time, to keep this group of Singaporeans within the radar of the Government. MCYS Minister Vivian Balakrishnan recently expressed fear at a youth forum that the more cash is given to the disabled, the more people will label themselves as disabled to qualify for the cash. But, Sir, we must not let the fear of being taken advantage of, prevent us from doing what we know is right. This fear can be alleviated if proper measures such as clarity of eligibility criteria and proper certification from approved doctors are applied.

Sir, here are a few measures that I wish the Government had considered for the disabled when planning for the distribution of the Budget surplus for the year:

One, adopt a less stringent qualifying criteria in existing means-tested social service programmes, such as early intervention for children with special needs and day activity centres for the disabled. Families with young children requiring early intervention are now suffering further as MCYS continues to implement means testing over these few years by raising the income ceiling bar for subsidies.

Two, exempt VWO-run community hospitals, day activity centres and special schools from having to apply GST on the fees they charge their clients. Currently, GSTs are applicable once the VWO providers show more than $1 million worth of revenues in their books. There is no reason why VWO with the vision and capability to grow their operations to serve more people should have to charge their clients more due to the kick-in of GST once it exceeds $1 million in size.

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Three, consider a one-time top-up to the Minimum CPF Sums and even the recently announced Trust Fund for the Disabled to help build up their financial security for the future.

And, four, reduce the administrative jungle which beneficiaries have to go through in order to sign up for subsidies or help. Although tools such as the Central CDC's signposting booklets which are very good and the MCYS' ComCare hotline is meant to help, needy citizens still have to approach different agencies after that, who all seem to have different application forms and inclusion criteria. As per the corporate sector, we should consider assigning an account or a case manager at one primary base agency, eg, the CDC or a Family Service Centre, and have all agencies agree to one Master Application Form so that the poor beneficiary does not have to approach so many agencies and complete so many forms and interviews. In this respect, I want to commend the leaders of the VWO MILK Fund, who were wise and gracious enough to agree to share and accept their beneficiaries' case files, where reasonable, to reduce the administrative burdens of clients.

We can even take it one step further and use information technology to make a shareable master case file web-accessible with password protection to save the completion of so many forms.

Sir, Singapore ranks second in the world for the ease of paying taxes, says a report by the World Bank's IFC, and PriceWaterhouseCoopers. In helping the needy, I am sure our Government can do better for a more efficient and more effective case assessments and follow-up system.

Sir, on the second segment of population for the Singapore workforce, I fully agree with the Minister's focus on training and innovation and propose some

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additional ideas to assure our long-term competitiveness.

Sir, there appears to be an increasing number of talented young people opting for non-engineering and liberal arts subjects at tertiary levels. If this trend is true, I suggest that the Government analyse the situation and look into ways to ensure that we do not become lopsided in our expertise base in our country.

And, Sir, instead of always relying on companies like Temasek Holdings and GIC to add to our economy via its returns on investments, we should look into building more local companies that can be scaled and compete in other countries. Companies that other people admire and companies that other people would like to buy or invest in.

To do that, we will need to build real bench depth in management and execution capabilities in both public and private sectors and especially in local SMEs which have the potential to grow. We should learn from the best practices of global firms which not only train their entry level staff rigorously in many things - in critical thinking, problem solving, budgeting, marketing, scenario planning - but also ensure that these skills are aligned with the workplace practices and can be applied upon return to the workplace.

Government should also refrain from the temptation to seduce all talents to join the public sector through high pay and benefits packages that Government bodies with deep pockets can afford. To ensure a vibrant economy and so a cohesive society, there is a need to ensure a balance of talents in all the public, private and people sectors.

For the long-term competitiveness of the Singapore workforce, the Ministry has been spot on in its strategy of making innovation pervasive in our economy.

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However, looking at the experiences of many successful and innovative global firms, it does not appear that the current incentives offered on individual R&D projects are sufficient to make innovation or creativity pervasive in our country. A more sustainable route for the Government's consideration is perhaps to help develop a culture of innovation in Singapore amongst as many Singaporeans as possible in schools and workplaces. In the book "The Elegant Solution - The Toyota Way", it was reported that the Toyota organisation implements one million ideas each year. It further describes that innovation requires pre-requisite skills like critical thinking and learning at all levels of employment at Toyota, and that humility is the base of learning. There is much we can learn from great global firms such as Toyota before Singapore can spawn great firms of its own.

In conclusion, Sir, national budgets are merely allocations of resources to help realise the vision and aspirations of a country. Just like a house does not make a home, neither does the economy make our country, although it is important.

I was at an international conference just two days ago, on a Sunday, watching a fast-paced video promoting Singapore to foreigners. It was a very busy video clip describing Singapore - a city state complete with integrated resorts, Singapore Flyer, skyscrapers, financial institutions, good-looking shops with good-looking women buying good-looking bags. It looked just like another international or modern metropolis city. The Singapore I love was not depicted in the video - the melting pot of different races, different religions, different abilities, our HDB flats, our rich culture, our penchant for food, our Asian family values, our clean and green garden city, our schools and our struggle to help catch

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those who are risk of being left behind as we march on to become a corporate powerhouse in Asia. I wish we have more pride to show these unique aspects of Singapore to the world.

This year's Budget with its conservative - what Bee Wah says is " xi sheng jing shen " ( 牺牲精神)

- and octopus-reach, especially to help Singaporeans who are at risk to catch up, reminds me of the Singapore I know, the Singapore with many faces.

Sir, with that, I support the Budget.

2.14 pm

Mdm Halimah Yacob (Jurong): Mr Speaker, Sir, when I listen to comments about this year's Budget, I am reminded very much by Jack Neo's popular movie "Money No Enough". Because no matter how much is handed out, it will never be enough as there will always be demands for more.

Feedback from our union leaders, however, has generally been positive. As one of our union leaders, Mr Victor Pang, the General Secretary of the SATS Workers Union, sums up "the Budget is fair, as everyone got something". Mr Muthukumaraswamy, the General Secretary of our Amalgamated Union of Daily Rated Workers, wished for higher wages for his low-wage members but he felt that the Medisave and Medifund top-ups, in particular, are useful as he has a fair share of older workers in his union and is naturally concerned over the rising healthcare cost.

Sir, most of the discussions on this year's Budget have touched on the Growth Dividends. But, to me, what is more important are the developmental aspects of this Budget, such as the investment in education and training, which I consider to be progressive and farsighted. I believe that the most

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important part of this Budget is the emphasis on building a resilient community.

I would like to touch on three ways in which the NTUC is contributing towards building a resilient community and how this Budget would help us achieve this objective.

The three areas are: (1) reskilling of low-wage workers; (2) Back to Work Programme for Women; and (3) re-employment of older workers.

On reskilling of older workers, last year, NTUC assisted 15,044 workers to acquire better skills and to move on to better jobs. One good example is our effort to help workers in the electronics sector facing retrenchment to reskill and be redeployed to other areas of work, where there is a demand for workers. As the Executive Secretary of the United Workers of Electrical and Electronic Industry (UWEEI), my union works closely with companies to reskill workers who face the risk of retrenchment. Last year, for example, 1,500 electronic workers went through the Skills Retraining Programme (SRP). These workers continue to remain in their jobs but the SRP will help them to do the jobs when new technology comes into the factories. And up to January this year, we helped about 500 workers who were facing retrenchment to be reskilled and redeployed to other jobs. As you know, the electronics sector is a very volatile sector and, every year, we have the highest rate of retrenchments. We know that we cannot stop retrenchments but at least we could do something to assist the workers to move on to other jobs in the same or other companies, or even to other sectors. When ST Microelectronics, a wafer fabrication factory, decided to hive off their low value-added work to China, we worked with the company and WDA to reskill the workers so that the workers could move on to higher value-added jobs in the company. That particular exercise was particularly uplifting because workers

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not only kept their jobs, but most of those who were affected and retrained were workers above 50 years of age.

One example of a worker that we had helped is Mdm Hamidah Sanwan. Mdm Hamidah's job became redundant when ST Microelectronics wanted to move out their operations. But there were many job opportunities in the front end. The union worked with the company to put her through a series of training and last August, she was placed to do the front end manufacturing at the company's wafer plant in Ang Mo Kio. Mdm Hamidah is more than 50 years old when she accepted the union's advice to go for reskilling. This shows that age is not a barrier to acquiring new skills. Mdm Hamidah now has a good job paying her $1,400 a month. If we have many more workers with the same gung ho spirit as Mdm Hamidah, we will have no problems building a resilient community.

UWEEI is now working with other electronic companies such as FCI, PAVC, Seagate and Cummins, to name a few. This year, NTUC, as a whole, will be assisting 20,000 workers through reskilling and job placements. This will be made much easier under the CET framework and I strongly support the top-ups to the Lifelong Learning Fund and the change to the SDF levy as well as subsidies for working adults to acquire part-time degrees at the three public universities and UniSIM.

The second way in which NTUC is working on to help build greater resilience in our community is through the Back to Work Programme for Women. Under the Back to Work Programme, which we launched last year, NTUC aims to place 2,000 women back to work. In the face of rising costs and a widening income gap as well as greater job insecurity, as more people are now employed as contract or casual workers, women play an important role in helping to strengthen the family's

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finances and helping to build up the family's reserve that is so critical, particularly during rainy days. The WDA also supported our effort to help women get back to work through the $3 million Flexi-Works! fund. Companies can tap into this fund in order to redesign their work, such as developing part time and flexible work options. Indeed, a number of companies have already implemented flexible work options, such as KK Hospital and DBS Bank. These are enlightened employers, and by implementing such schemes they are also helping themselves because they are better able to retain skilled and talented women who would otherwise leave because of work life balance issues.

But changing the mindset of employers is only one part of the equation. There is a need for us to change the mindset of the women themselves as well as their families. One Human Resource Director recounted to me her experience in trying to place a housewife who was looking for work. The morning after the job interview, she received an unannounced visit from the housewife's angry husband who warned her that under no circumstances, she was to employ his wife. This is not an isolated story as I have heard other instances before. I think families must discuss and think through some of these issues. There is no shame for the wife to work to help the family. It should not be seen as something undesirable or that the husband is irresponsible. Circumstances change and if there is a need for the wife to work, then she really needs the support of the whole family. We can go on asking for more help from the Government, in terms of childcare and other support, but what is equally important is the mindset of families towards working mothers.

In November last year, with the CDCs, we launched the 30 Minutes to

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Work programme. The objective of this programme is to help place women in jobs near their homes. One successful example is Mdm Pang Kim Hong, a 40-year old housewife, who has two children and who left the workforce 13 years ago after she gave birth to her first child. She is now working in McDonalds, one of our partners, as a part-time crew. Mdm Pang's example shows that having left the workforce for many years is no barrier to re-entering the workforce if they have the will and if we help them by providing them with the skills and through job placement services.

This Back to Work Programme is all the more urgent now that we have CPF LIFE. I would like to join others in urging greater attention to be placed on this issue as women form quite a high percentage of those without the Minimum Sum of $40,000. A survey by the MCYS among 3,000 women shows that many do not have savings for their retirement. This year's Budget will make it a lot easier for husbands to top up the Minimum Sum Accounts of their homemaker wives. If they do so, their wives too will benefit from the Life Bonus. To help spread the message, the NTUC has launched an outreach programme called Women Interactive Series, or WISE. Under WISE, we aim to reach out to as many of our union members as possible to encourage them to top up their wives' Minimum Sum Accounts. I urge the Government to provide an attractive bonus to encourage and persuade husbands to top up the Minimum Sum Accounts of their wives.

The third way, in which the NTUC is working on to help build a resilient community, is through our re-employment of older workers. As at January 2008, 385 unionised companies have committed to re-employ older workers above age 62. Currently, there are 3,650 retired workers being re-employed by 253 companies. For 2008, we aim to achieve a re-employment rate of 5,000 retired

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workers. This is an important pillar in building resilience as the Minimum Sum draw-down age has been raised to 65 years. If workers have no jobs after 62, it will be a real struggle for them to survive. Even as we discuss about the merits of CPF LIFE, we must not forget this very important aspect.

Mr Speaker, Sir, the Budget covers two other important aspects; inflation and the widening income gap. Many Singaporeans have expressed concern about rising costs. Our lower income households, in particular, have been harder hit by rising food prices because such households usually spend proportionately more on food. Although we understand that some of the cost increases are inevitable because of imported inflation and the high oil prices, I agree with Mr Inderjit Singh that the Government needs to manage inflation, and help to control costs particularly those that are within its control. I remember that, in 1993, I was a member of the Cost Review Committee, which was tasked to look into the question of rising costs. A key recommendation of the Cost Review Committee was, and I quote, "that fee increases, where necessary, be carried out gradually and spread over several years. Fee increases by various Government departments should also be carefully coordinated to prevent the public from being hit with too many cost increases around the same time". This is a recommendation that is still relevant and useful and I urge all our public sector agencies to heed this advice, so as to avoid a sudden spike in cost increases, like the one we experienced over the last two years.

For many years, Sir, we have been able to keep inflation at a very low level. I fear that if inflation continues at this rate, wage pushed inflationary pressures will mount. So far, we have been able to keep inflationary pressures out of our wages because people have been able to

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enjoy real wage increases due to the low inflation rate, and this has helped us to remain competitive. So, I urge the Government to continue to take steps to control and manage inflation.

But, Mr Speaker, Sir, keeping our focus on building a resilient community is also critical in dealing with the challenge of a widening income gap, a more intractable issue staring at us. Since 2000, our Gini coefficient, a measure of the income inequality in our society, has been going up. A report released by the Department of Statistics recently showed that although, on average, wages in almost every income bracket have gone up, high income households have enjoyed bigger pay increases while the less well-off have seen more modest wage gains. The average monthly household income for the top 10% earners rose 10.5% to $20,240. For the bottom 10%, income from work increased just 3.9% to $1,210, or 1.9%, after inflation. Last year, our Gini coefficient was 0.485, which is higher than even the US Gini coefficient, but declined to 0.46 with the GST rebates, WIS and other assistance schemes, a ratio closer to the disparity level of five years ago. This widening income gap is a cause for concern, and I am glad that at least some of the measures in this year's Budget, just like last year's, are meant to address this issue.

We know that the widening income gap is not peculiar to Singapore. A 12th November Newsweek article devoted much space to this issue under a big headline entitled "The Death of Social Mobility". A sub headline says, "In the Asian Tiger economies, the next generation will struggle to do as well as their parents did." A recent report of the New York Times under the headline "Poverty is Poison" highlights the perils of not addressing poverty. It says neuroscientists have found that "many children growing up in very poor families

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with low social status experience unhealthy levels of stress hormones, which impair their neural development." The effect leads to impaired language and memory development of a child - and hence his ability to escape poverty.

Mr Speaker, Sir, Mr Tharman was spot on when he said, and I quote him, “for Singaporeans to stay ahead, it must continue to be a place where Singaporeans can aspire, where there are opportunities to develop every skill and talent, and where everyone does his utmost to do better and surprise with his abilities." In other words, Singapore must continue to be a place where everyone can look forward to the future with hope, and everyone has the opportunity to fulfill his dreams, provided he is prepared to work hard.

Our strong economic growth, sound tripartite relations, strong work ethics and tremendous focus on developing our people, stand us in good stead in addressing this challenge of a widening income gap. And I want to applaud the Government's farsightedness in introducing the Workfare Income Supplement (WIS). This has given greater motivation and meaning to work for our low-income workers. As our daily rated workers tell me, "What we want is not handouts but the dignity and satisfaction that a decent income gives to us from our own efforts.".

Hence, the most important part of this Budget, in my view, is not the Growth Dividends but the investments that we are making in our people which are all aimed at empowering Singaporeans to take better control of their lives and to keep social mobility alive.

Mr Speaker, Sir, in line with this focus to empower Singaporeans to take greater control of their own personal development

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and upgrading, I would like to suggest that the Government consider the feasibility of giving every Singaporean an Individual Learning Account (ILA), which can be topped up every year if there are Budget surpluses. We are already doing this with the Edusave Accounts and now the Post Secondary Education Accounts. So why not make the signal even stronger and extend this support to Individual Learning Accounts for working adult Singaporeans. I know that there is a concern about such schemes because of the possibility of abuse and wastage as we can see in some countries. But there are also other countries, such as Denmark, which have successfully implemented it. Now that we are putting the CET framework in place with the focus on building world-class training providers,

perhaps this is one idea that we can revisit with safeguards, if necessary. The ILA would send a very strong signal that Singaporeans should take ownership of their own learning and not leave it to the company, or the government, or the society. The ILA would also further strengthen the WDA's current worker-centric model of training compared to its past company-centric model.

Mr Speaker, Sir, let me now turn to CPF LIFE. Our unions' feedback to CPF LIFE has been positive. Many feel that this would further strengthen our social safety net but they have also expressed concern over the plight of the many low-income workers and contract and casual workers who do not have the Minimum Sum of $40,000 to participate in the scheme. They are concerned that such workers will not have a sufficient retirement income.

Let me quote to Members the case of Mdm Chua Ah Yan as an example. Mdm Chua is 44 years old and is working as a cleaner earning $600 a month. Mdm Chua has two children in school, and her husband works as a dishwasher earning $1,500 a month. Both of them are also supporting her husband's retired father.

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Mdm Chua has only $700 in her CPF balance.

With CPF LIFE, our social safety net has become stronger and tighter, but the low-income workers, like Mdm Chua, who are left out will not have an adequate retirement income and will not benefit from the additional 1% that the Government is contributing to the first $60,000 of our CPF savings. This group is not insignificant, as they constitute about 25% of active CPF members who will turn 55 in 2013. It should be a matter of concern for us if we have a social safety net that excludes 25% of the people, the very folks who need such protection the most. So I urge the CPF Board to continue to explore ways to be more inclusive in drawing up our social safety net so that all Singaporeans, particularly the low-income workers, will also be covered under our CPF LIFE.

On a related point, Mr Speaker, Sir, last year, we reduced the employer and employee CPF contribution rates for older low-wage workers. The objective for doing so was to help such workers enjoy a higher take-home pay and to help reduce employers' cost of employing them. That policy somehow contradicts the CPF LIFE scheme, and so I would like to ask the Government for an assessment on how that policy would, in the long term, affect our low-income earners' ability to save up for CPF LIFE and prepare for their own retirement. We may not be able to do very much for the existing cohort nearing retirement, but we need to at least understand whether the policy of lowering the CPF contribution rate for low-income workers would further exacerbate the problem for new cohorts of low-income workers. I understand, Sir, that it is a perennial issue of balance, ie, between fulfilling today's needs and saving for tomorrow's. But it also shows that while a defined contribution retirement scheme has generally worked for us, moving ahead, there are difficulties

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with such a scheme because there is very little social risk pooling. I urge the Government to pay attention to the retirement needs of low-income workers as they are the ones that need a retirement income the most but, under the present policies, are the ones that are less likely to be able to save for their retirement.

Sir, there are Singaporeans who wonder whether the Ministry of Finance could exercise some flexibility in determining the eligibility criteria for the Growth Dividends. Instead of looking at only the value of the property, could the Ministry also look at the total number of people living in the household, as two persons living in a three-room flat will get a higher dividend compared to 10 persons living in a five-room flat? After all, sometimes, people buy bigger flats out of necessity because they have big families.

Finally, Sir, I understand the rationale for granting companies deduction if they top up the Minimum Sum accounts of their employees. However, at the same time, I am also concerned that companies may use this flexibility as a tax haven, particularly if the benefit is confined only to their very senior management. Hence, I hope the Minister can address this point as well in his response to this House.

In conclusion, Sir, I support the Budget, which will help to strengthen our work ethics, develop a more resilient community, whilst maintaining Singapore's competitiveness. I urge every one to do our part to keep the Singapore dream alive. We must give those in the lower-income bracket hope for a better tomorrow. Through skills training, they should be able to earn more. Through good education, their children should be able to do even better than them. In this way, we will have many more examples of Mumtaz Mohamed Yusof, who was cited by Minister Tharman as a shining example of how a student from a low-

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income family could rise to the top of her cohort.

Let me just say a few words in Malay, Sir.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, the Budget this year gives a lot of focus on the lower-income group because they suffer the most from the rising cost of living. Many will definitely feel relieved due to the assistance given through this year's Budget.

But it is good if we can remind ourselves that whatever assistance given will, of course, be temporary in nature. No assistance can be given forever without bringing risks to the country and the individual. The country cannot afford to give continuous assistance for the long term, without affecting our ability to compete. The risk to the individual, if we are too dependent on assistance alone, is that it will weaken our desire to be independent and to work hard. So the best and most effective long-term strategy will be for us to determine that everyone is employed and possesses the skills needed by our economy, in order to face the challenges of globalisation or a changing economy. By possessing skills and a spirit of independence, they will be able to find better jobs if they are retrenched, and also reap higher value jobs provided by our economy. We must be open-minded and willing to improve ourselves all the time.

We must also take advantage of all the opportunities provided by the CET network. The recently announced CET network is an effort that gives specific focus to help workers improve their skills and further their careers. Under CET, a greater allocation is being provided under the Budget this year.

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I also welcome a number of measures that were outlined under the Budget to assist workers, such as the top-up to the Lifelong Education Fund, and subsidies for those wishing to take part-time courses at the university level.

For sure, Mr Speaker, Sir, employment is the best assurance to manage the problem of the cost of living and the widening income gap. Employment is also essential to enable us to save more money in our Minimum Sum, so that we can enjoy a lifelong monthly income after retirement.

Here, I would like to suggest that the CPF Board carry out more efforts to explain and guide the people, because I feel that many are confused and wondering what are the options to be made under CPF LIFE. This confusion is not just confined to the ordinary people; even the professionals do not quite understand the CPF LIFE scheme. I was at a recent dialogue session that was attended by doctors and they, too, do not quite understand the CPF LIFE scheme.

Sir, in the field of employment, we have worked hard to strengthen the Malay community through the employability network under the Community Leaders' Forum. This network will be further refined to be more effective in assisting them. One aspect that will be given specific attention is whether we can give a more effective and integrated support to assist the lower-income workers, so that they can escape the cycle of low-skilled jobs.

Sir, the Malay community has made great strides in all aspects, and I am confident that, once again, we will be able to take advantage of the opportunities provided under this progressive Budget.

I support this Budget.

*Cols. 899-902.

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2.40 pm

Dr Ong Seh Hong (Marine Parade): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, some people feel that the allocation of $1.8 billion out of the $6.4 billion surplus is not enough. Mr Low Thia Khiang appealed to the Government to reduce the 2% increase in GST. But I support the Minister for Finance in maintaining a cautious, pragmatic and far-sighted financial policy. In providing short-term assistance, we have not forgotten the need to ensure the long-term competitiveness of our country. As Singaporeans, we have to adjust a certain psychological bias towards the Budget.

Every year, at the time of publication of the Budget, people are no longer interested in ensuring the long-term competitiveness of our economy or continued economic growth. What they frequently ask is: "What am I going to get out of the goodies? How much am I going to get?" When the economy is not doing very well and people expect the Government to help, it is understandable. But when the economy is doing well and the surplus is sufficient, then the people are saying: “The Government is now rich. Whether I need it or not, every one hopes that the Government would distribute more goodies for the people and not only expecting them to help those who are really in need of help." With this kind of psychology, whether the economy is doing well or not, and there is this expectation that the goodies will increase from year to year, where is the money going to come from?

So I am worried. Are we not beginning to lose our cautious attitude to prepare for a rainy day? I believe that the Government has a duty to lead the people, educate them and re-establish the attitude of putting aside the grain for a period of scarcity. Not only to help the people, we must also manage our surplus

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and save our surplus so that, when there is a storm, we would have sufficient resources to help our country and people to ride out the crisis.

This type of hongbao psychology is partly brought about by us. I suggest that we - the Prime Minister, Ministers, MPs, and the newspapers, all of us - should no longer consider the time to distribute goodies. We should let our people understand and carefully explain and differentiate between the two. The package of assistance, on one hand, is aimed at helping those who are in need, ie, the lower-income group. On the other hand, the distribution of surplus is only given out when the economy has done very well and a part of the surplus is distributed to the people. If we can differentiate between the two, then we can reduce the confusion of the people. So I hope we will not use the goodies to describe our Budget.

I would like to ask the Minister for Finance why is it that we must wait for Budget time to review the past year's conditions and provide the necessary assistance. Does this not mean that the social security net is not adequate and that it is no longer in time to make changes to meet those who are in need - the disadvantaged group? We know that water from a distance would not help to fight a fire near our place. If we wait for one year before we look for a solution, what about the lower-income families during the year? I hope that the Government would re-establish a review on our social security system to further improve our social security to be more flexible, comprehensive, and to cover the lower-income group so that when there are changes in the economy, they will be helped in time.

This year, the Minister for Finance has generously raised the Public Assistance rates. For a single individual, it has been increased from $290 to $330. Our

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authorities believe that, as far as the singles are concerned, a sum of $330 is the minimum required. I would like to ask the Minister: amongst the older Singaporeans, what about those who are not receiving Public Assistance? How many of them have an income below $330? I have met some people and many of them are singles living in rental flats. They are not working. But they have some CPF savings, not much, but the money is locked up in the account, and they would withdraw $200 plus every month from their CPF Minimum Sum. Because they have an income, they cannot apply for Public Assistance or other welfare benefits. They have to pay their own rent, utilities and daily living needs and medical cost. I believe that this is a sandwiched group of people in the lower-income. I hope that each year, they will be able to get some assistance. But they have a long-term problem. If they have to wait for a package of assistance, which is not certain, then I believe they will be living in uncertainty. With inflation and the annual increase in the cost of goods, the amount that they can withdraw from the Minimum Sum is, in fact, relatively lower and lower. Amongst the lower-income group, I hope the Government would be able to find a long-term measure to help them so that there is a minimum standard of living for them.

This is my personal view and I feel that this is a gap in our social security net. Many of my colleagues have brought up the problems relating to social security and their shortcomings. I hope the Government will carry out a comprehensive review of the social security net to ensure that those who are in need will not have to wait for the goodies from the Budget and that, every day, they will be able to lead their lives without uncertainty.

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I would like to talk about the education policy. I am very happy to note that the Minister for Finance is investing more and more to raise the quality of our manpower. Not only is the Government doing more for the Post Secondary Education Account, it has also raised the CDC and the CCC bursaries. These are bursaries provided by CDCs and the CCCs in respect of universities and polytechnics. The quantum of the bursaries has increased, and it has also increased the MOE's quantum as well as the coverage from 50% to 66% of lower-income families. In addition, there are also new bursaries for polytechnic students and this is given to 50% of the lower-income families. But I would like to ask the Finance Minister: why is the MOE bursary amount given to students of the universities and polytechnics differentiated? Why not raise the percentage of bursaries to polytechnic students, so that it is given to 66% of lower-income families, and more families can benefit from the bursaries?

For those university and polytechnic graduates who face financial difficulties, I would like to ask the Minister how much is their loan upon graduation. What is the amount that they have to repay? From the Internet forum, I have come across some university graduate grumblers. They said that they have to borrow money during their university days, and have to work and study at the same time. But the foreigners who receive scholarships have several hundred dollars of allowance every month. They do not have to pay tuition fees so they have a more comfortable life and they have more time to study. They do not owe a debt upon graduation. So I hope the Minister will be concerned about these students.

Sir, the tuition fee for citizens, as far as I can gather from the Internet, is from $6,000 to $18,000. For a medical student, it is $18,000 a year. The cost of living is about $3,000-$4,000. For each

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student, the total cost - tuition fee plus cost of living - is between $10,000 and $22,000. At present, the CDC and the CCC bursaries amount to $1,600 per year. MOE bursaries are between $800 and $1,200, according to their family income levels. In contrast, these bursaries are like putting out a fire with a cup of water. It is hardly sufficient. And I find that the students have to borrow money or work and study at the same time before they can complete their studies. So I hope the Minister will consider raising the quantum of the bursaries. And for those who study courses where the tuition fees are higher, like medicine, they should be given higher bursaries so that they do not have to bear a burden of lifelong debt.

Sir, I support the Minister's Budget Statement.

*Cols. 903-908.

2.52 pm

Mr Siew Kum Hong (Nominated Member): Mr Speaker, Sir, a lot has been said about this year's Budget - much praise, many keen observations, and certainly, plenty of smart suggestions. I hope that this House will bear with me, as I add a few more comments.

We had a surplus of $6.45 billion last year. This year's Budget is projected to incur a deficit of $0.8 billion. There will remain a huge amount of funds from last year's surplus that remains untouched.

Singaporeans see last year's unexpected surplus as a windfall, generated in large part by the increased GST rate, their overall increased consumption, and their property purchases. It is only then natural for Singaporeans to want to partake of this perceived windfall.

The Government has argued in favour of prudence, of keeping something in reserve to meet unexpected

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contingencies. The other side of the coin then is that the Government must not hesitate to use this massive war chest to provide assistance if and when needed. I think if either the economy or inflation gets much worse over the course of the year, Singaporeans will rightly expect appropriate off-Budget measures from the Government.

Perhaps, more accurate forecasting and projections in future would go a long way towards avoiding the repetition of such surprises. After all, surprises on such a scale are not desirable.

Thanks to this Government's ability to consistently perform better fiscally than initially projected, many people have learnt to discount its forecasts. Even before we start the new fiscal year, economists have begun contradicting the official forecast of a deficit for this year. This state of affairs cannot be healthy.

More importantly, improved accuracy in forecasting will ensure that we do not raise taxes like GST, or Government fees and charges, unnecessarily, to make up for revenue shortfalls that do not materialise. Such increases impose a burden on the people and, as we have seen, have a strong inflationary effect.

Sir, the Minister has attributed this massive surplus to an active property market and better-than-expected economic growth. But despite last year's impressive real GDP growth of 7.7%, many Singaporeans still do not feel better off. Instead, in the face of the worst inflation experienced in 25 years, there is an extremely strong sense of being worse off amongst many Singaporeans. Why is that so?

No less than Nobel laureate Joseph Stiglitz has criticised the use of GDP growth as an indicator of progress. He noted that GDP growth does not measure environmental degradation or depreciation

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of natural resources. It can mask declines in quality of life, where GDP may go up but people's income could be going down. He also pointed out that such a practice rewards governments only for increasing materialistic production. Well, Mr Stiglitz has been asked by the French President to head a panel, tasked with devising a new method of economic calculation that includes quality-of-life measures.

Indeed, there is a view amongst some Singaporeans, that our stunning headline growth numbers do not tell the full picture. We are told that Singapore has done well, is doing well, and will continue to do well. Our blistering GDP growth in recent years supports this view. Even with the imminent slowdown, we are still expected to grow by between 4% and 6% this year - healthy by any standards.

And yet, some questions persist. Who exactly has benefited from all this growth? How much have Singaporeans benefited from it?

Sir, I will try to shed some light on these questions. Let me start with wages. Wages, as a proportion of Gross National Income, has stayed relatively stable, averaging 43% in the period between 1993 and 2007. It was 41% in 2007.

We do not have official statistics on the breakdown of wages between residents and non-residents. But we do know that the majority of jobs created in the past three years went to foreigners.

As at December 2007, there were 900,800 non-resident foreigners employed here, or one-third of our workforce of 2.73 million. This compares with 671,200 non-resident foreigners employed here as at December 2005, or 28.9% of the 2.32 million workforce then. The proportion of non-resident

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foreigners in the workforce has increased by 15% over the past three years.

Unless most of the jobs that went to non-resident foreigners during the past three years were low-income jobs, which I certainly hope was not the case given how heavily our growth strategies rely on the attraction of high-quality foreign talent here, the increase in the proportion of non-resident foreigners in the workforce means that the share of wages going to foreigners has probably also increased in the past three years. And this is based on non-resident foreigners. Once permanent residents are factored in, the proportion of wages going to non-citizens would be even higher.

In other words, in proportionate terms, non-citizens seem to be benefiting from our GDP growth more than Singaporeans are, at least, in terms of wages. As our population moves towards 6.5 million in Year X, fuelled mainly by more foreigners coming to Singapore, this trend will only accelerate.

What about capital? Perhaps if Singapore-owned capital is benefiting from the economic growth, then we could make the case that economic growth has benefited Singaporean entrepreneurs and investors. Unfortunately, the picture may be even bleaker for capital. According to the Singapore Corporate Sector Report, in 1995, 30% of the paid-up shares in Singapore companies were foreign-owned. By 2005, this percentage has jumped to 45%.

In other words, the proportion of foreign ownership in the Singapore corporate sector increased by 50% in the 10 years between 1995 and 2005. If I had to guess, I would say that this proportion has increased further in the three years since.

Sir, even I would say that the statistics I have cited are not conclusive.

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There is a fair amount of inference and guesswork. But I think it all shows that there are some very legitimate questions that can be asked, that need to be asked, about the true extent to which Singaporeans are benefiting from all this economic growth.

I do not think it is enough to merely say that our economic growth has created jobs for Singaporeans, that the low resident unemployment rate serves as a proxy indicator of the benefits from growth. That is a purely quantitative measure. Quite apart from the point that the statistics available group both Singaporeans and permanent residents together, those figures do not shed any light, whatsoever, on the quality of jobs going to residents, on the extent to which residents have benefited.

Sir, I do not mean to be xenophobic, or to argue against having foreigners here. I work in an US MNC, mostly with foreigners, and I certainly appreciate the many important contributions they make to our economy. But surely, Singapore's economic growth should benefit Singaporeans more than others.

Some Members have already questioned the so-called "grow at all costs" strategy, of growing the economy as much as we can in good times, to make up for the years of slow or no growth. This seemingly unrelenting focus on GDP growth alone does not take into account the quality or nature of that growth, or the distribution of its benefits.

And I have to ask: why should Singaporeans continue to support this pursuit of GDP growth, when they pay the price for it, in terms of higher inflation and more stressful and poorer quality of life, and yet may not be reaping the benefits to an appropriate extent? A possible answer may be that even if Singaporeans are not directly benefiting as much as others, the Government does

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reap a fair share of gain, which it then uses to assist needy Singaporeans.

Certainly, the special transfers are welcome. I applaud the Government for its efforts to redistribute all these monies to the needy and the low-income. And I must confess that it dismays me when higher-income Singaporeans complain about getting less than their less well-to-do brethren.

But special transfers are ad hoc in nature. Unless we tap the reserves, they are conditional upon surpluses in past years. We need to make sure that there is protection for Singaporeans in bad times as well, which is exactly when the need for help is at its greatest.

Sir, I do not intend to suggest specific measures for the Government to consider. Other Members have made many sound suggestions, and I am sure many more will be made in the next two weeks.

Instead, I propose to explore what seems to be the Government's philosophy in helping Singaporeans. Its approach seems to be underpinned by three fundamental principles: avoid wasting public funds, avoid undermining the work ethic, and avoid creating a bloated bureaucracy by keeping things simple. Unfortunately, this approach will often clash with our basic human impulse for care, concern and compassion, and it will generally overlook intangible and unquantifiable factors.

Mr Speaker, Sir, last year's Budget and Committee of Supply debates were my first. They were memorable for many reasons, but one particular sequence stood out in my mind. During the COS debate on the issue of a caregiver's allowance for those looking after the disabled and older relatives, the Minister for Community Development, Youth and Sports referred to a concept in policy circles called "deadweight funding".

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The argument was that a caregiver's allowance will require the Government to spend a lot of money, spread out over a very large number of families, and so the families who really need help will end up receiving less than they otherwise would. So, there will be no caregiver's allowance. We should not waste public funds on those families with caregivers that do not really need help, never mind that there is currently no direct financial assistance at all for caregivers, never mind that this means that those who do need help will not get it, and never mind that the gesture of an allowance means a lot more than the actual amount.

I would hazard that a similar sort of thinking underlies the Workfare Income Supplement Scheme's approach to casual and self-employed workers. To ensure that WIS payments are made only to those who are really working, to encourage people to continue working, we require beneficiaries to make Medisave contributions to qualify for WIS.

This is in stark contrast to the previous Workfare bonuses, which were ad hoc special transfers, where casual and self-employed workers qualified for the payments simply by signing a form. As a result, only 54,000 out of an estimated 160,000 casual workers and self-employed are actually receiving WIS payments.

Sir, the reason is not difficult to understand. These workers are usually very cash strapped and living day-to-day, hand-to-mouth. And that is exactly why the WIS was implemented, in the first place, to supplement their low incomes.

But by requiring them to use their already insufficient cash to make Medisave contributions to qualify for WIS, the inevitable occurs. Many simply opt out, and we end up missing out on two-

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thirds of a key group that we were trying to help through the WIS.

Or take means testing. I will speak more about means testing during the Committee of Supply debate on the Ministry of Health. But for present purposes, it suffices to say that the current proposal is to perform means testing based on one's income level, and housing type for those without income, such as retirees. The rationale is to keep things simple.

But this is likely to end up penalising the high-income with big families and multiple dependants, households with a low per capita income. In effect, this is the group that ends up bearing the cost for the Ministry's desire to keep the method of means testing simple. In fact, the lesson seems so well learnt by some that during the public feedback sessions on means testing, there were even calls to cut back on the subsidies even more. Have we really lost the capacity for compassion? I am glad that the Health Minister rejected this suggestion outright.

And what about Public Assistance? The Minister has announced a $40 increase in monthly PA payments, which for a single-person household represents a 13.8% increase, from $290 to $330.

But with prices having increased 6.6% over the past year, $330 is really worth $309.50 in January 2007 dollars. In other words, that single-person household would only be seeing, at best, a 6.7% increase in real terms. I say "at best", because the inflation rate experienced by the lowest income group tends to be higher than the average inflation rate.

The Minister for Community Development, Youth and Sports recently said that the groceries necessary to satisfy the Health Ministry's nutritional recommendations for a person would cost $95 every month, and so $290 a month

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should be enough for a single-person household on PA.

Never mind that individual circumstances may result in some having greater needs than others. Never mind the stories of PA recipients surviving on rice and soy sauce, barely making ends meet. Never mind that limiting the amount so tightly seems to begrudge PA recipients some degree of comfort above subsistence levels.

To avoid eroding the work ethic, we leave no room for generosity, no room for error or contingency for PA recipients, no room for the occasional treat that is not given to them by charity. Never mind that PA recipients are, by definition, unable to work in the first place.

Sir, we do not want to undermine Singaporeans' work ethic. So we decline to implement an institutionalised social safety net that is either expansive or generous. We choose to err on the side of being conservative, some might even say stingy. We are willing to be under-inclusive and leave some of the needy out in the cold, instead of being over-inclusive and allowing some undeserving persons to slip through the cracks and benefit. We prefer to focus on safeguarding public funds, instead of helping people.

Many Singaporeans ask why the Government does not do more to help Singaporeans. Why does the Government not help Singaporeans, when it has the resources to do so? I would phrase the question like this, "What does it mean to be a Singaporean?"

The Government consistently emphasises the importance of individual responsibility, of ensuring that people do not abdicate responsibility for their lives to the Government. As a result, we provide the bare minimum level of assistance so that Singaporeans will not starve.

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Yes, we are all responsible for our lives. We have to be. But that is not the full story. It cannot be.

The point is not about judging those who made mistakes or wrong choices somewhere along the line, or finding them undeserving. To cast the question in terms of whether a person deserves aid, is to miss the point.

The point is to help our fellow Singaporeans in their time of need. The point is to be compassionate, because there, but for the grace of God, go I. The point is to assure Singaporeans, that if, touch wood, they fall on hard times, they will be taken care of. Simply because they are Singaporeans, and Singapore will take care of her own.

We have to. Because if we do not, nobody else will. The world does not owe Singaporeans anything, it has no obligations to do anything to help Singaporeans. But maybe, if being Singaporean is to mean anything, Singapore does. Just like the more fortunate Singaporeans amongst us have a duty to help the less fortunate.

Yes, help needs to be applied in a smart, careful and judicious manner. But avoiding waste, avoiding erosion of the work ethic and avoiding a bloated bureaucracy should not detract or distract us from the very reason for providing assistance in the very first place. We should not extend help with our right hand, and then pull it back with our left hand.

Mr Speaker, Sir, sometimes, it can be worth having some wastage or inefficiency, or "deadweight funding", if the net benefit to Singaporeans outweighs such wastage or inefficiency or deadweight. And by "benefit", I mean benefit in a holistic sense, both tangible and intangible, and not just economic or financial benefit.

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Intangible benefit could mean better peace of mind for PA recipients, secure in the knowledge that there is some buffer in their monthly allowances. It could mean the sense of recognition enjoyed by caregivers from having their efforts recognised by the state in the form of caregiver's allowance, even if they do not necessarily need that money, even if the sum is more symbolic than substantial.

It could mean the relief felt by casual workers and the self-employed, in not having to make Medisave contributions before enjoying the benefits of WIS. Or it could mean the security of the middle class and especially the sandwich class, whose high salary translates into a low household per capita income when spread across all of their dependants, in knowing that they will still be entitled to a full subsidy offered by the Government if they opt for a 'C' class ward.

Sir, Mr Ngiam Tong Dow, in an interview with the Petir magazine, cited the view of a so-called "thinking Singaporean", that "all our national policies serve only at the altar of economic survival." Mr Ngiam argued that, "the government has to appeal to the people's heart to build the nation of Singapore, not just their stomachs.'

I agree whole-heartedly with Mr Ngiam. And appealing to the people's heart requires the Government to put aside its penchant for cold, hard calculations, and to occasionally err on the side of generosity and graciousness.

Sir, I want to live in a country that cares for its people first and foremost, not a country that prioritises GDP growth for its own sake. I want to see a nation where Singaporeans are valued for everything that we are, not just the economic contribution we can make. I want to grow old in a state that places a

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higher premium on helping citizens, than on ensuring that there is no wastage of public funds. I want to be part of a generous society that helps its most vulnerable members, instead of counting the pennies and tightening the purse strings.

I do not think that I live in such a country yet, and that disheartens me. I sometimes question what it means to be a Singaporean, and I consider myself one of the lucky ones. This bodes ill for us in this era of global mobility, if other Singaporeans are similarly disenchanted. And those who leave, those who are able to leave, the 1,000 Singaporeans who leave us every year and do not come back are exactly the very ones that we need to stay.

Sir, I hope one day, I can say that I do live in such a country. Maybe one day, I will see a Budget that reflects the principles and ideals that I have just spoken about. Until then, I can only continue to hope.

Mr Speaker: Order. I propose to take the break now. I suspend the Sitting and will take the Chair again at 3.40 pm.

Sitting accordingly suspended at

3.15 pm until 3.40 pm.

Sitting resumed at 3.40 pm

[Mr Speaker in the Chair]:

ANNUAL BUDGET STATEMENT: **** Debate resumed.

Mrs Josephine Teo (Bishan-Toa Payoh): Mr Speaker, Sir, thank you for allowing me to participate in this Budget debate.

No matter how I look at it, I think it is very hard to quarrel with this year's

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Budget. The Government has decided that we are in a financial position to raise the overall Budget by 12.5%, or a very significant $7 billion. What this means is that every Ministry will be provided with better resources, and this ranges from 2% in one case to 184% more budget than the year before. Our higher than expected budget surplus has also enabled us to share this with the people, and the give-aways are worth more than $1.8 billion. So, in many ways, this is an excellent Budget - a wonderful position to be in.

But I think the Budget is really a check point. It is a time for reflection. It is also a time for us to chart the Government's workplan, and then to find ways to provide the necessary resources for executing that workplan. And during the Committee of Supply, each Ministry will explain how they are going to make better use of the enhanced resource provisions. But before we get to the COS, at the Budget debate, it is my view that we should look at the bigger picture. And when looking at the bigger picture, essentially, I think there are four questions we have to address.

The first question is: what are the opportunities for Singapore right now, in the next one year, two years, three years? The second question is: how can we help to create a better Singapore for ourselves, Singaporeans? The third question, and an area which I will spend considerably more time on, I think it is also prudent to ask what are the challenges and the risks that we face in thinking about the year ahead for Singapore. Finally, in any planning process, we should have a contingency worked out.

Mr Speaker, Sir, I would like to share how these four questions look like from the workers' perspective, and for the next couple of minutes, I will speak in Mandarin.

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( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, I am going to speak from the perspective of the workers on four different areas. Firstly, looking at the future, what is the future of Singapore? What kind of opportunities will Singaporean workers have? Secondly, what kind of process and the ways in which we can forge a better future? Thirdly, and this is the main theme that I am going to touch on, at the moment, what kind of challenges do we see? What kind of crisis and risks do we face? Lastly, and most importantly, how are we going to meet these challenges?

Firstly, let me touch on the future. As far as the works are concerned, what kind of opportunities are there? The present economy is prospering. The manpower market is strong and vibrant. All sectors are doing well. As a worker, there are many opportunities. They can work in the same company. If your company is doing well, you should be able to get better wages. Not only in your own company, perhaps among your competitors, business is doing better and better, and more opportunities present themselves. So, for the employed, he can consider changing his job, looking for better opportunities elsewhere. This means that they have more opportunities to get better jobs, better income, and a better future for their family. For professionals, managers, executives and technical staff, they are particularly in demand during this period. They enjoy the fruits of a prosperous economy. Even for the lower income workers, whether they are casual labourers or contract workers, they too can look forward to better protection for their jobs. For the older Singaporeans, they too have the opportunities to be re-employed, because many companies feel that there is a shortage of manpower, and they are more willing to consider the employment of older workers, and retain them. Similarly, for our housewives, there are more

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employers who are willing to provide jobs which are suitable to them, so that they can be brought back to the working environment. So, the prospects are good.

The second problem is: how do we forge a better future for Singaporeans? About a month ago, our Prime Minister announced that there is a continuing education blueprint. In this blueprint for continuing education, we are going to include more workers, from 20,000 to 80,000 workers, under the continuing education scheme. In his Budget speech, the Minister for Finance has provided a considerable amount of $800 million for the lifelong learning fund. This confirms the Government's intention to do more for continuing education. In addition, I notice that in the provision for the Ministry of Manpower, there was an increase from $2.6 billion last year to $7.2 billion this year, an almost three-fold increase. I think the Ministry of Manpower must have some specific schemes to share with us and how they are going to use these resources more systematically to help our workers, so that they are better able to face the opportunities brought about by a prospering economy. Furthermore, the Government has made provision for better and higher bursaries for university and polytechnic students. The Post Secondary Education Account has been given a sizeable provision.

The Minister for Finance has given our enterprises very attractive tax measures to encourage them to be more innovative and creative, especially on R&D. Through this initiative, we can take our economy to the next level. From this Budget, we can see that the Government has put aside a lot of resources to help us forge a better future.

Next, I would like to talk about some of the challenges and risks that we face. The first challenge is the increase in the

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cost of living. Many of my Parliamentary colleagues have touched upon this, so I do not have to talk about it again. But overall, the reaction of workers is positive. They feel that the Government, through the distribution of surplus, has helped the people to compensate for the increase in the cost of living and has alleviated some of the pressures. For those who are above 50 years old, the Medisave account has received a top-up which is a sizeable amount.

The second challenge is that our manpower market is very tight. In this very tight manpower market, wage increase is inevitable. But what we have to be concerned about is whether these companies can continue to raise the wages. We can see that when some employers adjust their salaries and wages, they increase the fixed wage portion but not the variable component. If the employers continue to increase the fixed wage portion in its monthly wage, it will be able to attract more workers to join the company. But in the long term, it may not be sustainable. So I hope the employers would consider allocating a greater part of the increase to the monthly variable component, and this can be better sustained.

The second question of concern is that although the manpower market is tight, and the future is not very clear, some enterprises still hope that by employing short-term contract workers, they can overcome the shortage of manpower. This short-term measure is particularly noticeable in the financial sector. The wages are going up, the contract value is high but it is still a contract. Perhaps a year later, he loses his job. So what we can see now is that the wage has increased but there is no job security for the workers. If the economy continues to do well, then it is not a problem. But if the economy does not do well, if the economy continues its downslide, these workers will be affected.

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This is a risk. It is a challenge that we are concerned about.

*Cols. 909-912.

( In English ): Mr Speaker, Sir, I will now continue my speech in English.

The third challenge that I see for us is that the economy may overheat. Sir, in this regard, I hear many of my colleagues feeding back businesses' concerns that companies are not being helped enough in ameliorating their business costs. But my reflection is that in a healthy and a functioning market economy, this is exactly what should happen. There must be some self-correction. When resources are scarce, prices go up, and profitability will be affected. Companies must then assess where to prioritise, what businesses to pursue, and what businesses they want to scale back. And in those areas that they scale back their investments or their businesses, they pool their resources and the requirements and the tension will be reduced, and that is exactly what should happen. So, in a certain sense, my observation is that this Budget is, if I could use the term "proactively reactive", it has decided not to do anything to further stimulate the economy but that is a decision that was thought through. So it is "proactively reactive", not going to do anything until we require.

From my perspective, it is important that we do not over stimulate the economy. So, with this in mind, in fact, I have a question for the Finance Minister. We are going to put 12.5% more into Government spending and in Economics 101, we learn that income is equal to consumption plus Government spending plus investments, plus exports minus imports. The formula reads Y= (C+G+I+X)-M. All economics students at 101 learn this. So, what this means is that when you increase Government spending by 12.5%, this will, in fact,

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have an expansionary effect on the economy and my question to the Finance Minister, Sir, is whether he can explain to us why he thinks this 12.5% increase in G (Government spending) is not excessive. Or is he anticipating some kind of a slowdown and therefore he sees the need for us to put in more in Government spending? Also, I think the more important question is: in what way is the increased Government spending not just consumption, but rather it builds capacity and enhances Singapore's longer-term competitiveness? That is the question that I hope the Minister can help us to achieve a better understanding of it.

The fourth challenge that I see for ourselves is that in this very tight labour market where companies are really finding it difficult to take all the businesses that they have, upgrading will not be their priority. This is a concern. We are doing very much on continuing education and training and what these CET plans will do are to improve the supply of skills and improve the supply of skilled manpower, but this increased supply of skilled manpower must find an increased demand by the industry or the people who have gone for the training will not find it very meaningful. It must translate into better demand for their skills which also means that it must translate into better pay and that can only come if industry spends effort and time to think about moving to higher standards, instead of accepting all the business that lands at their doorstep.

Sir, in fact, when I heard the response of businesses to this Budget, I was, to be honest, somewhat disturbed. Whenever I have participated in dialogue sessions or radio shows following the Budget, there has been rather lukewarm response to the innovation and R&D incentives that were announced in the Budget. In fact, we hear more of claims that not enough is being done to help businesses contain costs. So, if you take this from the worker's perspective, the natural extension of this

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argument then is that businesses very soon will ask, if they have not already done so, for more foreign workers to relieve them of this pressure on the manpower shortages. And there have also been reports that businesses would like Government to review the foreign workers levy, ie, whether this could be reduced.

Sir, the workers' perspective is that here are the good times, here are the opportunities and they hope to be able to gain from this, but if there is not enough time for them to gain from it, then they are squeezed out even when the going is good. So that is concern. This worry is reinforced by, I think, a lack of recognition of what the Government has done and its continuing efforts to create excellent conditions for businesses. These excellent conditions include very favourable hiring labour market practices, promoting a very flexible labour market, removing rigidities everywhere and also, increasingly, undertaking more and more of the continuing education and training costs, increasing our investments to improve the skill level of our people.

Mr Speaker, Sir, I would like to say that this is not to remove or diminish the contributions that foreign workers have made to growth in Singapore. I think we fully recognise that our current policy in Singapore has benefited Singaporeans. It has created the conditions for growth and this growth has created a situation where Singaporeans experienced increased income, the lowest unemployment in many years, lowest retrenchment. So, in this regard, I was quite interested to hear Mr Siew Kum Hong mentioned earlier. He asked the question, "Is the growth for Singaporeans or for the foreigners?" I think he asked the question, "Who gains more?" I did not think that it was a question of who gains more. I think it is a question of, "Can we make this win-

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win?" There is no reason for us to deny a foreign worker or foreign workers the opportunity to gain from this if we ourselves are able to gain from this. I think we need not be foreign-worker centric in the way we look at this issue. We should really look at the issue and say, "Are we able to make the best use of the situation, enable our own Singaporeans to grow along with it?" So, I think, the approach is not who gains more, but it should be how can we make this win-win.

Having said that, I think it is also important for us to recognise that we never know when the economy may turn. In TODAY's front page news, like nobody expected it to come back so early, the haze is with us again. Perhaps, when we least expect it, poorer economic conditions may be upon us. So, we do not know. In that context, I would like to encourage the Government to think through the cost benefits of further relaxing the foreign worker quota or reducing the foreign workers levy. I hope this is something that the Ministry of Manpower would consider and how we can further refine our approach in managing foreign workers.

I think our goal should be that foreign workers can be an instrument to help businesses to catch the growth. At the same time, it should allow the businesses to have a breathing room for them to press on with their upgrading efforts instead of substituting for their upgrading. So, on the one hand, have a manpower augmentation for foreign sources boost the growth but, at the same time, invest in training and upgrading. That is what I think we should endeavour to achieve.

Mr Speaker, Sir, my final point is on contingency planning. What is it that we are going to put in place, in case our assumptions for this Budget do not bear out. I would like to note that no plan can be perfect and so the Budget must be

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based on some assumptions. In this regard, when I heard Ms Sylvia Lim talk about the poor Budget marksmanship or there were some criticisms of the Budget marksmanship last year, it reminded me of the days where people were not able to tell the gender of the child they were bearing. So, you would be asked, "Is that a boy?". I do not know. Some will guess it is a boy; some will guess it is a girl. Whatever the baby's gender turns out to be, some people will be right, and some people will be wrong.

So there would be people who guessed that we would exceed our budget, there would be people who guessed that we would not have enough, and whatever the situation may be, some would be right and some would be wrong. So, I think we should not spend too much time arguing about the Budget Marksmanship because, at the end of the day, it is better that we are prudent and not overly optimistic.

So, that leads me to my final point which is that, as we think about this Budget, what are some of the pressing questions that we must bear in mind. Mr Speaker, Sir, I confess that, yesterday and today, I have heard of many requests. Many have asked the Finance Minister to set aside more for this, more for that, and it leads me to question: what is the basic ethic that we hope to promote in our society? Is it one where there is a mighty Finance Minister who will dish out ever increasing goodies to all of us? When we ask the Government to do more of this and more of that, what it has, to me, is that there must be bigger budget provisions for the Ministries, otherwise, how are they going to carry out their work. And if it is going to require bigger provisions for the Ministries, how are we going to pay for all of these provisions? And by logical extension, does it mean that our taxes will have to be further reviewed in order to provide for sufficient budget to take on more and more of these programmes and initiatives that we want

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to do? That, I think, is something that we need to reflect on which, as I said right at the beginning of the Budget, is a time for reflection: where do we put our scarce resources? And in that regard, I rather like what my colleague, Ms Lee Bee Wah had talked about. She gave a quote from the author of the little prince - cannot pronounce his French name very well - but I remember the quote which says something to this effect, "Don't worry about foreseeing the future. Your job is to enable the future." And I think that exactly describes what the job of the Finance Minister should be. I am not trying to describe his job. I am not determining his job description. But I think that is what the Finance Minister needs to do and, that is, to create the conditions to enable each one of us to be able to do our part.

In this regard, I am also reminded, in the old days, in the dynastic China, the Emperor would ask the Imperial physician, "Can you give me better longevity? Can you cure this disease of mine? Can you do this? Can you do that?" And the poor Imperial physician would say, like the Finance Minister, "How can I promise you all of this? It is quite difficult." So going back to what Ms Lee Bee Wah has talked about, I think what the Finance Minister can best do for us, through the Budget, is to create the conditions and to enable us to be able to come together to do our part. So workers must help themselves.

The NTUC will put all our resources, whatever is necessary. We have set up the Employment and Employability Institute. We have spared no effort in job recreation. We have spared no effort in putting more people back to work after retirement. We have spared no effort in bringing women back to the workforce, and we will continue to do so to help our workers. At the same time, we hope that businesses will also help themselves to upgrade. Sometimes, workers have asked us, "You keep telling us that we have to

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do this. But we have no control over whether the business booms or busts because much of that lies in the hands of the leadership, nearer the top, the people who take care of marketing, the people who take care of finance. What about them? What are they going to do?" So the Finance Minister can at best help to create the conditions where workers will help themselves, businesses will help themselves, communities and families will come together to support one another. And I think that if we are able to set aside enough with this type of mindset in place, then we will be able to create a better future for all Singaporeans.

From that perspective, I believe this is a well-balanced Budget, which I support.

4.05 pm

Assoc. Prof. Kalyani K Mehta (Nominated Member): Mr Speaker, Sir, my fellow parliamentarians have elaborated at length yesterday and today on the issues of rising inflation, challenges of globalisation and the stiff higher costs faced by businesses in Singapore. Amidst all these gloomy predictions for the year ahead, how do we build a resilient community to combat the negative effects? All the goodies that have been addressed in the Budget Statement 2008 are comprehensive. The Finance Minister has to be commended for looking at the nation's economic situation in a holistic fashion, across all ages, sectors, classes and across the lifespan, as he has squashed the "death" duty permanently!

Today, my speech will focus on CPF LIFE scheme and its implications because of its lack of inclusivity. The National Longevity Insurance Committee, or NLIC, has to be applauded for designing a flexible and yet sustainable scheme that aims to cover the basic needs of the majority of Singaporeans for life. The

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Committee has seriously considered feedback from ordinary Singaporeans as well as experts, such as actuaries, social security policy and retirement experts.

As we know, 12 options will be available under the compulsory CPF LIFE scheme which has been accepted by the Singapore Government. It will affect Singaporeans who are working and actively contributing to their CPF accounts upon reaching age 55 in 2013.

The following categories of CPF members will be exempted from the scheme:

(1) Those physically and mentally unable to work;

(2) Those of unsound mind;

(3) Those suffering from a mental condition leading to a severely impaired life expectancy;

(4) Those who are suffering from a terminal illness or disease; and,

(5) Those who will receive a pension, annuity or other benefit which will provide him or her with payouts equivalent to the LI scheme and which cannot be changed or recovered by CPF if terminated.

Apart from the last category, the previous four categories are classified as "vulnerable population" in this speech.

Three additional categories are exempted from this scheme. Firstly, those having less than $40,000 in their CPF accounts when they turn 55 in 2013. According to the Report of the NLIC, posted on the CPF website, 25% of the first cohort that turn 55 in 2013 will belong to this exempted category. This amounts to about 8,750 Singaporeans. This number will accumulate over the years and many of them may not have family members to depend on if they are

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single, married but childless, divorced or separated, or widowed. They would need to continue working for as long as their health permits.

Take the hypothetical case of a clerk, Ms Ho, who has to shift from full-time to part-time work due to her filial obligation to care for her father who had dementia and her mother who was bedridden. Now, Ms Ho is 50 years old, so she will turn 55 years in 2013. If her Retirement Account has perhaps $25,000 or even $30,000 and none of her family members are able or willing to top up her account, even the L-Bonus will not help her to reach the $40,000 minimum required. I have spoken to such family caregivers who are working, who have used part of their Medisave for their dependent parents and are sometimes the only child in the family. Caregivers like her worry how will they manage in their old age. Such caregivers need a little helping hand. They are people who do not want handouts.

We move on to the next categories that are excluded from the CPF LIFE scheme. These are the housewives, alluded earlier by some of my fellow parliamentarians. Mdm Halimah has spoken about this. It was reported that there are approximately 200,000 housewives who do not have Medisave accounts. This figure was reported in the Straits Times when the means testing subject was being discussed by the Health Minister. I presume that they have no CPF accounts and therefore they would be automatically excluded from the CPF LIFE scheme.

Another big category of Singaporeans who will not benefit from CPF LIFE are the informal workers like contract workers, casual or part-time workers like hawker assistants, odd job labourers who are not CPF members. This group is estimated to be around 120,000. Even if the number has been slightly reduced after the efforts

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of the NTUC leaders to persuade the employers to pay the CPF contributions in 2007, at least 110,000 would be still toiling without the CPF safety net. To sum up, three categories of Singaporeans consisting of those without CPF accounts or those with inadequate amounts in their CPF accounts are excluded, in addition to the "vulnerable" types of Singaporeans.

Let us pause for a minute. It is extremely important for us to reflect on the main thrust of CPF LIFE scheme to make provisions for those who are likely to outlive their financial resources. In my view, this would be the lower income class, housewives who outlive their husbands, and the physically and mentally handicapped. If a large proportion of this group is not drawn into the CPF LIFE scheme, in my view, the main aim of the scheme would be defeated. Presumably, the middle and upper income groups will already have other streams of income, so this small sum of perhaps $600, or more, would be just "pocket money" for them.

The recent Budget Statement has included ideas such as L-Bonus, a one-off bonus for those who sign up at age 50 for CPF LIFE. The maximum paid out is $4,000 and the minimum is $2,200. Thinking aloud, I wonder how much of a difference this makes to someone who has only $5,000, or $10,000, in his or her Retirement Account. Additional L-Bonuses are also offered to those above 50 years. The other incentives given in the Budget was the tax relief of up to $7,000 for employers as well as family members if they top up the Minimum Sum of their employees or relatives respectively. This is regardless of the age of the recipient when the top-up is made. These incentives are good, but whether they will receive a "buy-in" on the ground is doubtful. This is especially in view of the current economic conditions of rising inflation and a general sense of economic insecurity experienced by Singaporeans about their future.

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The reality on the ground is that the vulnerable populations and the informal workers are often the lowest 20% of households economically. So their relatives are not likely to have the spare cash to top up the Minimum Sums. The kinds of jobs they work in are at the low end, so the employers would not find it worthwhile to top up the Minimum Sums of temporary or ad-hoc workers.

The key point to remember in this incentive of tax relief is that in a lower-income

family, personal tax is not applicable as they do not fall in the taxable category. So how relevant is tax relief as an incentive?

Before moving on to my next major point, I would like to sum up at this juncture that the lack of universal coverage of CPF LIFE has strong implications for the total safety net for poor and vulnerable populations in Singapore. The Government cannot abdicate its responsibility towards the citizens who belong to these categories.

The next point is regarding the lower payouts for females in the CPF LIFE, based on, I quote, "actuarial advice", as their life expectancy is higher than males. Although two individuals, one male and one female, have the same amount in the Minimum Sum at age 55 in 2013, eg, $67,000 in cash, the payout would be $60 less per month for the female. I refer to Annex B of the NLIC report which states that a male would receive $650 per month while the woman would receive $590 per month at age 65. Under the old system, both would have received perhaps about $600 per month for 20 years. From the actuary's perspective, the difference of $60 per month is logical for the scheme to be sustainable. But from the social policy perspective wherein "equity" is held to be of high value in a

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government's handling of its citizens, the discrimination of females in this instance is unacceptable. For the older woman, who has the same needs as the older man, for example, to pay medical bills, rent, food and so on, the difference of $60 a month is a significant amount.

Sir, I would like to find out why the "risk pooling" principle enshrined in CPF LIFE scheme cannot be carried out without segregation of the two sexes. What are the impediments of going down this route? I would like the CPF Board to consider alternative ways to structure the payouts so that they can be equal, ie, maintain gender equity without increasing premiums. I do understand that the principle of insurance business has guided the committee to adopt this approach. But if we consider the CPF to be a social protection mechanism for Singaporeans, then all citizens need to feel that the Government treats them equally. If necessary, the Government could top up the Retirement Accounts of the female members during good years, or even use some of the interest gained from our Singapore reserves. It is said that women hold up half the sky, by reproduction, caring for their children and elderly parents, so a small gesture such as this is not likely to deplete the nation's resources. In fact, it will rectify the misconception that older women in Singapore are prone to becoming victims of poverty. I would add that such policies, in addition to the income divide of the country, add another layer, which is the gender divide, and I am sure we do not want that to occur over time.

When ElderShield insurance was introduced, one criticism that members of the public raised was the higher premium for females versus males. It was one of the reasons for its unattractiveness to the public and we have seen the consequences. Let us learn policy lessons from the past.

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Yesterday, Mr Heng Chee How talked about the importance of proper implementation in order to help people benefit from new schemes, as the success depends on the participation of Singaporeans in these schemes. Similarly, with CPF LIFE, I echo Mr Heng's words. I would like to suggest to the Ministry of Manpower to set itself time targets to carry out creative campaigns to expand the CPF safety net. If 25% of the first cohort is predicted to have less than $40,000 in 2013, this could be reduced to 15% with the cooperation of grassroots leaders, NGOs and the NTUC leaders. The husbands of the housewives who are non-CPF members should be targeted and sent personal letters to remind them of the $7,000 tax relief offered if they top up their wives' account or set up an account and then top it up to benefit from the tax relief. The real success of CPF LIFE will be when more than 80% of Singaporeans are covered and women receive equitable payouts similar to men.

I conclude with some suggestions for improved implementation of CPF LIFE.

(1) I would like to reiterate that public education of the CPF LIFE scheme is critical, as even educated members of the society are confused by the 12 options and how the old Minimum Sum scheme and the new one are being merged. Free public talks, roadshows, TV commercials inviting members of public to try out estimating their payouts by going to the CPF portal - as I did a few days back - lunchtime talks at organisations, and exhibitions in all languages are some recommendations.

(2) A hotline could be set up to answer enquiries on this scheme for at least a year so that people have a person to talk to if they have some queries.

(3) Alternatives need to be created for the vulnerable populations who are

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excluded from CPF LIFE so that in old age Singaporeans have some sense of dignity. This will help Singapore to live up to the position of a developed country in the world. The mark of a successful nation is not only its GDP growth but also how it designs and implements its safety nets to be effective, universal and relevant to its people. The Minister for Finance has focused on building a resilient community. I would add that we should work towards an inclusive, resilient community.

With that, Sir, I support the Budget, and I sincerely hope that my views will be given due consideration.

4.23 pm

Dr Loo Choon Yong (Nominated Member): Mr Speaker, Sir, the economy grew at 7.7% last year and we experienced exuberant residential and commercial property market conditions. Collection of stamp duties alone exceeded estimates by $2.3 billion. Motor car ownership taxes also exceeded by $0.9 billion. These taxes, particularly property-related stamp duties, being volatile, could not be expected to exceed estimates year after year. So last year was really an exceptional year with one-time windfall collections.

The sub-prime CDO crisis has slowed down the US economy. It is expected to slow down our economy too. Hence, prudence is clearly called for and the Minister for Finance keeping 70% of surpluses is understandable. This saving for the rainy day will enable us to continue with our assistance to the aged, the poor and the needy even when the economy slows down. So I support this prudent stance even though I feel we can be a little more generous to some of the disadvantaged people.

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Sir, the buoyant property market brought joy to all property-owning Singaporeans and residents. Developers, real estate companies, contractors and professional firms all did very well. Our assets appreciated and the wealth effect was everywhere. The Government collected more stamp duties and taxes. However, with such high capital values, rentals necessarily have to escalate in order for yield to be kept up. Businesses are complaining of high operating costs, as rentals in the CBD and elsewhere escalated to unprecedented levels. I am very concerned that our competitiveness is being eroded. The Government has reacted quickly to relieve the shortages through releasing more sites for commercial and transitional offices, making available State properties for business use, and even moving some of the Government offices out of CBD. All these measures are timely and should help to alleviate the shortage.

Dr Loo Choon Yong (Nominated Member): 4.26 pm

However, for each MNC and Asia-Pacific headquarters that finds Singapore too expensive to relocate to, we lose quite a few jobs and all the downstream economic spin-offs with it. So we must not forget the lessons we have learnt in the 2001 recession, ie, we must not price ourselves out of the marketplace.

Sir, over and above all the measures that the Government has taken, I wonder if the Minister for Finance would consider giving businesses a little short-term help by allowing double deduction of their rental expenses. This would effectively help them reduce 18% of their high rental cost and help those whose rentals have been revised upwards sharply in the last year. This may actually help marginal

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businesses stay afloat. I believe such a measure will also be helpful to the many retailers with high shop rentals and who may have to face lower demand when the economy slows down this year. The high rentals and other business costs have resulted in luxury goods sold in Singapore being more expensive than the same goods sold in Tokyo, Hong Kong and even Milan. This rental assistance should be reviewed annually and should be removed when supply comes on stream and rental becomes more affordable.

Sir, the sub-prime problem and the attendant financial crisis have already had their effects on the credit market. Whilst the world has been used to excess liquidity, we are now seeing tightening liquidity. Spreads have widened as risk premiums rise. I think it is safe to say that the days of cheap and abundant credit are over. Indeed, the Managing Director of MAS, Mr Heng Swee Keat, cautioned recently at the IMAS investment conference that the tighter credit could lead to a downward spiral in the real economy.

Sir, in this regard, I believe one of MOF's policies is no longer helpful and needs to be modified or temporarily suspended. The Ministry of Finance encourages statutory boards and other Government agencies to borrow from the private debt market and thus better appreciate the true cost of capital. This would enable the Government to better allocate resources and stretch the Budget. There was also the intention to deepen the debt and bond market. In ordinary times where liquidity is available and plentiful, the market can accommodate both private and public borrowers. However, in times of liquidity squeeze, private sector companies have no chance of competing against statutory boards and Government agencies for what precious little funds left available in the market. Unlike private sector companies, statutory boards are fully backed by the Singapore

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Government and enjoy triple-A rating. So, under current market conditions, lenders and investors would understandably choose to park their funds with debt instruments issued by these boards and agencies fully backed by the Government of Singapore. This flight to quality may soak up whatever little liquidity that is available. I understand that the HDB is now in the market looking to borrow $500 million, and LTA and JTC may well follow suit. And this morning, we read of foreign companies also coming to Singapore to raise funds for their operations elsewhere.

May I suggest that the Minister suspend this practice until the credit market loosens up so that Singapore businesses will not be choked for funds for business expansion. If the Government wishes to keep the original intent of the policy of making statutory boards and Government agencies pay the true cost of capital when they invest, may I suggest that MOF make available tranches of Government funds for competitive tender by all statutory boards and Government agencies needing to borrow.

Next, I would like to talk about retaining talents. I applaud the Government's many incentives to move us towards a knowledge-based economy. We used to be fearful of producing graduates because jobless graduates have bad revolutions elsewhere. Today, we know we need even more graduates. We cannot create the needed places fast enough. We may need to extend our educational and training support to include overseas institutions in this period of shortage. We are losing some 1,000 bright young people annually to other countries. Many bright students choose not to accept the Government's scholarship so that they will not be bonded to return. Many of them get recruited from Ivy League schools by US firms even before they graduate. They then progress in their careers, get hitched

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and settle down. My worry is that they may be lost to Singapore permanently. So, the current scholarship bond policy may actually be counter-productive and we should relook and review this policy. Even though I fully support the notion that Singaporeans who have been granted scholarship must return to serve Singapore, may I suggest that we keep bonds short and perhaps capped at three years for each scholarship?

Secondly, and perhaps more importantly, all scholars should be bonded to serve Singapore, and not just the Singapore Government, but both the public and private sectors, since they have been financed by public funds. In this way, scholars who return to serve the country will have the chance to contribute to the country in organisations of their choice. Those who willingly join Government service should make happier and better civil servants than if they are coerced. The civil service is no longer an unattractive place to work considering the improved working environment, excellent work-life balance and competitive compensation packages. And added to this, the loftier attraction of serving Singapore through helping to make better policies.

The scholarship bond should promote and instil pride of service to the country amongst our young, just as national service has. It must not be allowed to be an instrument for converting free Singaporeans to indentured serfs. Yes, these are strong and emotional words, but they are words that I have heard from disgruntled young Singaporeans. Moreover, whilst those from well-to-do families can afford to send their children overseas, others do not have this choice. We must always remember that if we lose our young, we will have nothing.

Further, since we are unable to build universities fast enough to provide more places, I would also urge the Government

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to consider allowing parents, who send their children to approved institutions overseas, some tax rebates when their children return home to work in Singapore and perhaps to the tune of the subsidy, that the child would have enjoyed if he had been accepted into a university in Singapore. This will help us grow our pool of graduates we need and also give more Singaporeans a chance at university education.

I fully support the Government's intention to increase our overall research spending to $7.5 billion per annum, or 3% of our GDP by 2010. Equally important is the move to encourage private sector to be more involved in R&D. The Scandinavian economies have reaped enormous benefits from such a policy. I am glad this support is given across-the-board to big companies, SMEs and start-ups. I am confident that this effort will result in greater commercialisation of R&D efforts as the private sector will be less likely to waste its resources on esoteric R&D activities without commercial potentials. And as the race and competition accelerate towards knowledge-based industries, the spending on R&D by other competing economies will increase. I hope we too will be prepared to grow our R&D spending beyond the 3% of GDP in the future. Since we can never compete on a low cost model in any field, we just need to be more innovative, more productive and be better in everything we do. Our R&D efforts should help.

I also want to thank and applaud the Government for their continued support for entrepreneurship, start-ups and SMEs. It is a delight for us to see so many banks now - local and foreign - actively calling up SMEs and start-ups to finance them and help them grow. With mainstreaming financers taking a greater interest, I am confident more of our start-ups and SMEs

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will grow into successful regional companies. The various Government grants and schemes have helped, especially in the early days when High Street banks were reluctant to finance these fledgling companies. I hope the Government will continue to support these young enterprises even as bankers begin to show interest in them.

Sir, some Members have called for review of the GST increase and others have criticised the timing of the increase. I do not think it is fair to expect the Minister to have predicted the extent of the exuberance of the property market. That would call for a degree of prescience, not commonly associated with budgetary formulation. That is why I see the $6.4 billion surplus as a windfall for Singapore.

This House has heard many impassioned speeches on high rate of inflation and the Minister informed us that had it not been for the strengthening of the Singapore dollar, our last quarter's inflation rate would have averaged 6.5% instead of 4.1%. As the Singapore dollar cannot be strengthened indefinitely, we will see an even higher inflation rate. So yesterday's announcement of 6.6% inflation rate in January this year did not come as a surprise. The Government has stated that it is very concerned with the higher cost of living. Fortunately, the GST offset packages will help to offset the 2% GST increase. But what about the increased cost of living as a result of high inflation? I therefore strongly recommend the Minister to review the situation and consider suspending the 2% increase in GST.

The GST is widespread in effect and it can quickly bring relief to all Singaporeans experiencing higher cost of living. I remember in 2002, the Government agonised over increasing GST, from the then 3% to 5%. And that was against a backdrop of economic recession, where

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we had unemployment and we have to cut corporate and personal taxes to restructure our economy. We now have surpluses and do not have to cut corporate and personal income taxes. Indeed, the collection of both these taxes also exceeded earlier estimates.

Sir, I also understand the reluctance of all governments and revenue collectors to give up what they have collected, especially when they have paid or spent political capital on. Governments also prefer to be distributing goodies to the poor and needy, rather than reducing taxes. I am sure there is also the concern that this may set a precedent in the future. Notwithstanding all the above and being an unrepentant optimist, I still hope that the Minister will be persuaded to review and suspend the additional 2% GST. It will mean a forgone GST collection of about $1.35 billion if the 2% increase is suspended in July this year. I am sure such a move will reaffirm in all our hearts that this Government cares and will always respond to the people's hardship. I believe the trust and the bond between Singaporeans and the Government will be that much stronger.

Sir, there is one small item in the Finance Minister's Statement that I have difficulty with. Yes, he has raised Public Assistance, from $290 per month to $330 a month, a 13.8% increase. And apparently, this was in response to the pleas of many Members of this House. The Minister has said that he had to refine the safety nets to help the most vulnerable in the community and that we have to do this, he said, in a calibrated fashion because the last thing we should do is to weaken the incentive for individuals to find a job and stay in one. I understand, and I agree with these sentiments.

Sir, the PA scheme applies only to needy Singaporeans who are unable to work and have no other means of

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support, that means, no other family or social communal support. I understand that about 50% of applicants are usually rejected because they either have other support or they can work, or with a bit of help, they can work. So the half that is accepted onto the PA scheme must really be in bad shape. They are often old, in poor health and cannot fend for themselves. There are not many of them, only 2,772 in 2006, and the number has not increased. So the PA scheme costs the Government about $10 million a year.

Sir, these old Singaporeans have also contributed to our country in one way or the other. I am all for Workfare, so I share the sentiments about not weakening the incentive to find and stay in a job. But I suggest that these sentiments do not apply to this group of unfortunate Singaporeans who are on the PA scheme because we have selected them rigorously and I bet there are no undeserving cases. I therefore urge the Minister to review this increase and be more generous and compassionate towards these poor Singaporeans.

Perhaps, the $40 increase was decided before he knew of the 6.6% inflation rate, or perhaps, it was just a simple oversight in an otherwise brilliant Budget statement. I hope the Minister will be stout-hearted to remedy this oversight and raise PA allowance by 38% to $400 per month for single person households and equivalent increases for family households. This will cost the Government approximately $4 million more instead of the proposed $1.5 million increase, which means, net-net, it is $2.5 million more only.

Having taken the issue with the Finance Minister over the subject of poverty and elderly, I am glad I can now compliment him on removing estate duties. People who spend all their working and waking hours paying taxes can now take comfort that death is now more affordable. And when they pass

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away peacefully, they can really rest in peace.

Sir, I support this Budget. I believe, save for a little oversight, there is the right mix of prudence, imagination, compassion, a brilliant piece of work indeed. I will continue to pay my taxes cheerfully.

4.44 pm

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Deputy Speaker, Sir, amidst the increasingly gloomy atmosphere contributed by global inflation and a possible American recession, Budget 2008 has presented a glimmer of hope to Singaporeans. The year 2007 saw sterling economic growth which resulted in a historic level of job creation and the lowest rate of unemployment in a decade. But sharp increases in food and oil prices in recent months have many Singaporeans worried.

Many of my parliamentary colleagues who spoke before me have praised the Budget for being generous. I shall not repeat what they have said but, suffice to say, that I agree with them that this Budget targeted the issues of increasing cost, education and retirement. It also has something for different groups of people, the low income, the middle income and even the higher income groups.

Although the Budget is not the be-all and the end-all of the Government's initiatives for the year, there are nevertheless some groups and issues that I feel could have been given more attention.

First, the disabled. I believe that more direct assistance should be given to the handicapped, especially those who are working and earning low salaries. Perhaps these people could be granted a special top-up under the Workfare Income

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Supplement in recognition of their strong will and industriousness in contributing to the economy despite their disabilities.

More should also be done for caregivers of the disabled. Sir, recently, a scheme was introduced where families caring for a disabled person can apply for a $95 rebate from the $265 maid levy. But why only $95 rebate? Why can such families not be given a complete waiver of the levy? It requires a special group of passionate people to offer their services for the disabled. There are not many that will come forward even if we pay them to do so. Sir, I hope this suggestion could be looked into, as caring for a disabled person can both be time and resource intensive. A waiver of this levy can go a long way in helping to ease the financial burden for such families too.

There was also an announcement on the Government-backed trust scheme for the disabled where families can set up a trust by contributing a certain amount of money or bequeath their property or insurance policies to their disabled children. When the parents pass away, the proceeds of the flat sale or of the insurance payouts go to the child's trust. This sounds like a good scheme, but I wonder how low-income families or an elderly single parent with a disabled child can come under this scheme. If they are low income, they may not have money or good insurance policies that can be bequeathed to the child. Such a scheme also would probably not be relevant to a single parent who lives in a rental flat with his disabled child. Ironically, these are the groups of people who need the most help, but will not be able to help themselves under this scheme. I urge the authorities to review the situation of such groups and come up with a plan which also addresses the needs of these people.

The second group that I would like to talk about, Sir, is the low income single elderly. As our population continues to

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age and as the rate of marriages continues to decrease, this group of people could potentially grow bigger and may turn into a social concern in the not too distant future. This is especially so when they have no one to depend on. I feel more targeted help could be considered for this group of low income single elderly. This may be in the form of higher Medisave top-ups, considering that they may not have other relatives to help in topping up their accounts, or slightly higher assistance for this group with bonuses or cash handouts could be given.

Apart from financial assistance, I see the need also for more engaging and sustainable social bonding programmes for the low income single elderly. Sir, there were quite a few news reports recently on single elderly people living isolated lives and some even dying alone without anyone knowing about it for some time. It is time that we thought about more befriender initiatives which can bridge generation gaps and strengthen our social fabric. These befriender activities should involve the community at large and those living around these elderly people, and not just be confined to befriender clubs or social and welfare organisations.

I would like to suggest that the Government come up with a scheme to encourage innovative yet meaningful programmes for schools, grassroots organisations or social and welfare organisations. For example, schools could tie up with grassroots organisations to adopt the low income single elderly people living in rental or 3-room flats in their areas and engage them in community projects. The students could connect with the elderly on a regular basis during or after school hours as part of their community involvement project (CIP). Before they start on a project, students could attend a workshop on befriending or caring for the elderly conducted by social organisations, and this could be counted as part of their CIP hours. Then, they

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could embark on the needs assessment initiative to understand the needs of the elderly and plan ways to engage them. If some problems are detected, students could then link them to a grassroots or welfare organisation, so that the elderly can then be attended to in a timely manner and given the appropriate help that they need. The visits or activities have to be done on a sustained basis so that it becomes a meaningful learning experience for the students and not just a mechanical exercise to earn CIP points.

An initiative like this will involve many parties and it can enhance relationships and engagements between grassroots groups, schools and elderly residents. Students will learn the challenges in communicating with and taking care of the elderly while practising the values of taking care of the weak and vulnerable in society. The community, including the young, will then be the eyes and ears of the neighbourhood and be on the look out for these elderly people who may not know who to go to in times of need.

Next, Sir, on environmental issues. Steps to encourage environmental friendly practices were also left out in the recent Budget. While we have the green tick system or energy labelling scheme for household appliances, I feel that a similar system should be put in place for vehicles. Vehicle buyers and road users should be given more information on the level of energy friendliness of their vehicles, such as carbon emission rate and not just the fuel consumption rate.

With concerns on road and transport issues in Singapore, I would like the authorities to consider looking at the system like France's green tax on petrol guzzling cars. The current COE and road tax system works on the basis of engine capacity. While this does to some extent give some differentiation between different types of vehicles, it does not necessarily address the issue of poor

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consumption and carbon emission. With new technology, some cars with bigger fuel tanks may have efficient engines which can lead to lower carbon emissions. In the French system, buyers of new cars with high carbon emission rates face a green tax, while buyers of more energy friendly cars are given a bonus or rebate.

Could our road tax system be tweaked such that it is based on fuel consumption and carbon emission, and not just the engine capacity of a vehicle? This will complement our efforts to promote a cleaner and green environment, as car buyers will be further incentivised to buy more fuel efficient cars and avoid petrol guzzlers. Such a system can be implemented quickly and will complement our other moves to go green, such as promoting compressed natural gas (CNG) vehicles by giving green vehicle rebates. While CNG cars are definitely the way to go for the future, I do not foresee though that they will become popular or mainstream choices any time soon. It will take some years to build up adequate infrastructure support, and besides there is also a lack of variety in terms of car models.

Sir, I would like to join my parliamentary colleagues who have made the call for more to be done in helping Singaporeans cope with healthcare cost. The Government is spending over $900 million in the next five years to upgrade and expand hospital facilities as well as to build a new hospital in Yishun. Another $1 billion will be spent over the next five years to recruit and train healthcare professionals, and $220 million on Medisave top-ups for those over 51. The $400 million top-up to the ElderCare Fund and the $200 million to the Medifund will help address the needs of the elderly and needy. While all these measures are worthwhile as they will improve the standards of healthcare facilities in

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Singapore, I hope that the Government will continue to look for ways to keep healthcare cost affordable. While it is doing its bit to help ease the cost of the elderly and needy, more needs to be done, especially for the lower middle and middle income classes who may be most affected by the upcoming means testing scheme.

I almost fainted when the hospital bill of my daughter's recent two-day stay for gastritis in a B class ward turned out to be $2,253. The doctor's fee for two 10-minute consultations alone was $650. This is really very worrying.

Let me move on to my last point, Sir. Like my parliamentary colleague, Ms Indranee Rajah, who spoke yesterday, I too am very concerned about issues related to housing, especially subsidised rental flats. In the past, most of the cases of people seeking rental flats are likely to be poor, the low income person with no other family members to live with or the elderly. With the liberalisation of housing loans to the banks a few years ago, I have noticed a shift in this profile of people. While the old, poor and destitute continue to form part of subsidised rental flat applicants, a new group of people have joined the queue, and these are families who have defaulted on their bank housing loans and chalked up high arrears and, as a result, were either evicted from their flats or were pressured to sell them off at a loss.

Like Ms Indranee, I too see cases where residents and their families turn to desperate measures because they have no roof over their heads. One family I know, who have seen me several times at my meet-the-people session, has been sleeping in a company van for many months, while another has pitched a tent at the beach. Most times, these people have to wait for many months before they are allocated a rental unit. Some are not so fortunate and continue waiting and

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appealing at the meet-the-people sessions. Not all find it possible to stay with their relatives or friends, as HDB flats are typically small and these relatives may not have the room to accommodate them.

Sir, this is a relatively new problem that may affect the social reality of Singapore. Ten years ago, the problem of homelessness was something almost unheard of but, today, it is a growing problem. Each MP may see only two or three cases a month but, collectively and over time, this will add up to quite a sizable number of families. What should we do about this? Should we be less sympathetic to these families, because most of them got themselves into this predicament due to financial mismanagement? With increased cost of living, many find it hard to juggle their finances even if they earn $1,500 or $2,000 a month. Most of these families have utilities and service and conservancy arrears or other debts and have to support their families. Some have depleted CPF accounts, while others have to make a cash top-up to their monthly mortgage payments.

While the supply of rental flats will be increased gradually from now till 2010, the current shortage may mean that some families will be homeless for some time more. I would like to ask the Government for the occupancy rate of the new Hope shelter for homeless families. Is there a long waiting list? If so, how many families are on the list, and what is the average waiting time? If demand is high, would the Government consider setting up another shelter for such families?

I note that the Ministry of National Development is reviewing the policy regarding subsidised rental HDB flats. I would like to suggest that income level for qualified applicants be pegged to a per capita basis rather than the $1,500 monthly income currently. This would be

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a fairer way of gauging the level of neediness of a family for a rental flat.

On that note, Sir, I support the Budget Statement.

5.00 pm

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

I compliment the Finance Minister for a well-crafted Budget. Indeed, I am heartened by it. It is not surprising; this Budget has been carefully crafted to balance many different needs. It is both comprehensive and generous, covering all sectors and offering something for everyone, including those better off.

Apart from the dollars and cents, I personally think that this year’s Budget will help strengthen Singapore’s economic position and at the same time forge closer bonds among the community. I thank the Government for keeping this promise that no one will be left behind. Sharing its surplus with all Singaporeans becomes “Uniquely Singapore”. Like a closely knitted family of different family members - with different strengths and weaknesses - we take care of one another. Our Government did not forget the low-income Singaporeans who are struggling to keep up with the increased cost of living, even as the country’s economy progressed robustly last year and we are in the midst of so many exciting things happening around us, such as the recently completed Singapore Flyer, the F1 that is happening in September this year and also the construction of the IRs, etc.

It is a good thing that the Government signals to Singaporeans that we must work hard so that together we can enjoy the fruits of our labour. And this is important to us because when Singapore is progressing, becoming more affluent

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and enjoying robust growth, we know that there are still many Singaporeans who may not be financially well-off and finding it difficult and hard to keep up with the pace. I would describe this year’s Budget as pre-emptive and that is “Uniquely Singapore”.

Sir, this year’s Budget saw the introduction of the National Lifelong Income Scheme or CPF LIFE which is an initiative to help older Singaporeans in view of longer life expectancy. But I feel we should do more to help this segment. While we help them to ensure that they have adequate money at old age, we should also ensure that they can enjoy their old age and not fall prey to criminals targeting at them.

Sir, I have been quite concerned with the issue of rising crimes involving the elderly. It is observed that in many countries such as Australia, the UK and the US, there is a similar pattern of upward trend in crimes involving the elderly. They are often an easy target of crime because of their disposition. With the growing number of elderly in Singapore, I strongly feel that there should be added emphasis on protecting older people from crime. It is heart-rending and upsetting to hear of these elderly victims - old, fragile and alone - falling prey to snatch thefts, robbery and cheating by vicious criminals. Elderly victims were reportedly usually robbed in lifts and at common areas of housing estates such as void-decks and staircases and they frequently happen between the early morning and afternoon when victims are alone and going about their daily activities. I hope the Government can dedicate more resources and enhance its operational capacities to help the elderly.

Sir, let me continue my speech in Mandarin.

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( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Next, I would like to touch on what I call the "MCP". I do not mean "Male Chauvinistic Pig" but "Middle-Class Plight". Middle-income is a "less definitive concept" and the economists’ own perceptions of the middle-income may vary. It would be anything ranging from $2,500 to $6,000 in monthly wages, or others may see it as monthly wages from $3,000 to $3,500.

I read with some interest the feedback from this year’s Budget. Many who fall in this category said that they would rather be very rich or very poor, but not in the MCP. Some even think that it almost seems good to be poor, because of the generous handouts. The middle-class is often the sandwich class in many cases. This is because they are “slightly better” than the norm, and they hope to live comfortably but yet they face the pinch from the rising cost of living.

One reader from the Straits Times said, “The recent hike in ERP and university charges makes these Budget giveaways seem like one hand taking away what the other hand gives.” They are not poor, so they cannot qualify for handouts from the Government that are meant for the low-income group, such as those on Public Assistance. They are not that wealthy to benefit from the Estates Duty exemption.

A typical young middle-income family would have little children to take care of, as well as their aged parents. But if their young children are between the age of one and six years old, we are talking about infants, and they have childcare and high pre-school cost to juggle with. Those whose aged parents are well and independent, they are blessed in many ways because they could help to look after their children. But what about those with aged parents who are highly dependent on them? They will definitely

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feel the most pressure. And these aged parents require their children’s attention and to provide cash in medical care, hospital visits, transportation costs, lodging costs in nursing homes, etc. This is especially so for those who are the only child or have one or two siblings. Given that they have to change their lifestyles by living simply, they cannot avoid the high costs in transportation and healthcare. Just imagine how much costs are involved in using the public transportation alone to ferry their children to childcare or to bring their aged parents to hospital on a frequent basis. The Budget does not address this particular need.

I am not suggesting that the Government must pay for them but I do hope that we can help them by having some schemes available where they can tap on. For example, I hope the Government could help them by allowing them to utilise their Medisave accounts to pay for their aged parents’ on-going medical care or even to tap on their CPF to pay for their elder-care homes or nursing homes. This would help ease their pockets greatly. The ongoing increasing costs for their aged parents’ regular medical check-up can amount substantially if we add them up. On the same note, I also suggest the Government consider future top-ups into young pre-schoolers’ CDCA accounts, instead of just focusing on those in primary school and above. This is because pre-school fees are also on the rise and they are a sure burden on parents with young children. I hope we can take cognisance of this group and, although they may seem a small group, it is surely a growing problem.

On the whole, I support the Budget.

*Cols. 913-916.

5.12 pm

The Senior Minister of State for Foreign Affairs (Mr Zainul Abidin Rasheed): Sir,

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thank you for allowing me to speak in support of the motion in the name of the Minister for Finance.

Singapore is now abuzz with talk and concern about inflation and cost of living woes. Headlines of 6.5% inflation rate for January will add to the worries. Although it is expected to moderate to 4.5% - 5.5% for the year, worries especially for the lower income will definitely linger. Yesterday's debate clearly reflects the growing concern and call for Government to do more. Equally clear is the concern that Singaporeans are always asking for more and also whether the hong bao mindset would create a mentality of wanting more every Budget. It reminds me of the film "Oliver". I am sorry I used the name "Oliver". I could have used "Ah Kow" or "Ahmad". But it will be felt by a lot of Singaporeans, not only the poor but also the lower middle-income group.

The Minister for Finance's decision to spend $1.8 billion of the $6.4 billion surplus from last year is indeed generous. And despite that, there is still a call for more, especially for the low and the lower middle-income Singaporeans who feel the squeeze most. This is felt by many in the House, also among our grassroots leaders, I suppose partly because of the large surplus of $6.4 billion staring them in the face. What then, Sir, is the right balance? The answer might be somewhere in between the $1.8 billion and the larger surplus of $6.4 billion. I would like to ask the Minister to elaborate on what were his considerations in deciding the $1.8 billion as against the $6.4 billion surplus and what would be his guiding principles for future reference to reassure Singaporeans that in fact it was a fair formula in meeting the concerns of Singaporeans when faced with rising cost of living and inflation, while planning and saving for the future.

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Mr Deputy Speaker, Sir, allow me at this juncture to welcome the additional top-up of $10 million for CCC's Comcare Fund, self-help groups and VWOs to support flexible assistance schemes to households that may need additional assistance. In the light of uncertainties and possible economic slowdown in the West and the growing inflationary fears, I would like to urge the Minister to monitor this fund closely in case more is needed later in the year ahead. I say this because even at this juncture, the national programmes need to be supplemented by local ones. We need to continue to monitor and identify the cracks existing in society to ensure that the social safety net we provide is effective and meaningful.

Members may like to know that at the North East CDC, we have introduced a number of local schemes to support the National ComCare Fund and the CCC Flexi Fund. From the Neighbourhood Provision Assistance Scheme to the Neighbourhood Medical and Dental Assistance Scheme, Pre-School Subsidy to Northeast eyeWear Scheme (NEWS) to the Dedicated Northeast Ambulance (DNA) Services, North East Healthcare on the Move (HOME) Plus, North East Essential Relief (NEER) Scheme to programmes to change people's mindsets and to wise-up to money matters like "Talking Dollars and Sense" and "Sharing Hearts and Homes". So there are quite a number of supplementary programmes that we put forth because we believe that while national programmes are growing, there are still cracks, there are needs which we know better at the ground level, at the district level, and we provide them to supplement the national programmes. And the latest of which we have also just introduced is a Matching Grant Programme with the grassroots organisations, CCC, in particular, to meet local needs called CPR. Do not panic. It

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is called CPR because it is short for Community and Provision Relief Fund. It can resuscitate, in some instances, but I think the idea is actually to provide more help at the grassroots level.

There is much that could still be done to fine-tune and improve the assistance schemes, but allow me to suggest two today:

(i) The Monetary Authority of Singapore (MAS) could do more to provide financial and professional support to expand programmes like what we have at the North-East CDC called Talking Dollars and Sense Programme which MAS sponsors. Here, we do spend quite a bit of time inviting all those who are receiving financial assistance to bring even their family members to go through a programme; counselling and informational programme where we can teach them how to stretch their dollar. When you hear children from poor homes, for example, wanting to go to McDonalds, parents cannot afford that and instead they go for Ramli burger or Dollah burger at home, where you can actually make cheap burgers at home and I think it can be equally good.

So, at North-East CDC, we have reached out to about 50% of those who are receiving assistance, where we teach them not only to stretch their dollar but also to change their mindset and how to be more self-reliant.

More can and need to be done to change people's mindsets towards self-reliance.

(ii) The Public Assistance programme. While welcoming the increase from $290 to $330, I believe there is a need for Government to consider a range rather than a flat rate to meet the different needs or situations. The Public Assistance range should depend on the cost of living (eg, rents and utilities), as it is different if a PA recipient stays alone in a rented room or shares with another PA

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recipient in a rented room or is a free lodger. Also, medical costs for those who need to go for dialysis are a lot higher.

Between providing assistance and changing people's mindsets about self-reliance lies our long-term approach towards managing the challenge of looking after our needy in Singapore.

Mr Deputy Speaker, Sir, it is all part and parcel of building a resilient community. No matter how top a quality our economy is, Singapore's success and stability will also be measured by how we take care of our low income and needy. After all, the Minister for Finance has also emphasised in last year's and this year's Budget Statement too that no one should be left behind or left out. It is also about how we keep everyone 'in'. Being involved, being inclusive.

On this note, Sir, allow me to continue in Bahasa.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Deputy Speaker, as I support this 2008 Budget, allow me to touch on Minister Tharman Shanmugaratnam’s summary about
"Creating a Top Quality Economy and Building a Resilient Community". It is a noble vision and an aspiration that should be held by every Singaporean, and not only the Government.

The miracle of Singapore's economic achievements is recognised and captures the world’s attention. This branding allows us to go further, to China, India, Southeast Asia, like Vietnam, and the Middle East, to look for new opportunities to spread our economic wings. As we share our skills and our experiences, we have to make sure that our competitive edge is maintained.

In this context, I welcome the Finance Minister's announcement to give more help to schools, polytechnics and

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universities, especially in the form of scholarships and bursaries to students.

With the Ministry of Education advocating the approach to "Teach Less, and Learn More", I suggest that the Government give a bigger grant to schools in order to accelerate this process. For example, the $1.5 billion grant that was announced for 100 schools the other day is not enough.

Schools, up to university level, have to be more innovative and creative in their education system.

Last Monday, I was invited as a Guest-of-Honour to the International Creativity Conference organised by the American Creative Association (ACA) and Singapore Management University. This is the first time the ACA organised this conference outside America, and Singapore was their choice. This proves that they look up to Singapore's creative efforts and we have to make sure that this high status that we have achieved, in terms of innovation and creativity, will be improved further by us.

Creativity and innovation will determine future competition and economic growth for all countries. We cannot be left behind.

Mr Deputy Speaker, our resilience cannot be measured through economic growth alone. Social resilience is important, especially after the September 11 incident. Inter-religious and racial relations cannot be taken for granted.

We are thankful that Singapore is a country that does not take lightly relations between civilisations and religion. Even though the Finance Minister said briefly that people have to work together to move Singapore forward, I hope that it is not only understood in the context of economic relations only.

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I want the Finance Minister to emphasise more clearly in his Budget Statement about the importance of promoting efforts and programmes that increase religious and racial relations.

I urge the Government to see this secular country that is Singapore, as "Uniquely Singapore", in terms of religious relations too. As I said before, I see secularism in Singapore as "secularism with a soul", that is, a system that respects the role that can be played by religious life in Singapore.

I hope the Finance Minister will not mind increasing the grant and budget for inter-religious activities that can bring about unity and resilience to our society and country.

Through my visits and participation in inter-civilisation seminars and forums in London, Berlin and Paris last year, I learnt that Western and secular countries in Europe are ready to make use of programmes and their governments' budgets for the same reason. So we have to be more proactive to have a long-term inter-religious and inter-civilisation plan that is laid out properly, in order to strengthen our society’s resilience.

*Cols. 917-920.

5.23 pm

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Deputy Speaker, Sir, the Budget for Financial Year 2008 has addressed the concern of rising cost of living, particularly the prices of many daily goods and services. Many Singaporeans, especially the lower income and elderly, really feel the pressure of inflation. What worries them most is whether they would be able to cope with their earnings if inflation continues. The one-off generous payout would only help

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them in the short run. They have asked, "What will happen next year?"

Being practical Singaporeans, they are concerned with the measures adopted by the Government in helping them to grow their income and the economy as a whole. The people want the Government to spend more resources to focus on overcoming the problems of low wages, low productivity and low self-esteem in certain sectors of the economy or industries. In this aspect, we need professional people to understand business and its value chain, analyse the problems and put in place the right plans that will help to increase job opportunities. Our Government departments may need to review their policies to assist companies. All ministries and statutory boards should focus and further introduce measures to help the workers, especially the low-wage workers. I believe this administrative effort will make a difference in truly helping and giving them confidence to cope with the rising cost of living.

I often watch the progress and issues in Taiwan. Many friends from Taiwan have commended how Singapore had done well in the last few years. Each year, when there is a Budget surplus, the Government acts like generous parents, giving them hong baos . Eight years ago, Taiwan was one of the four Dragons in Asia with good economic progress. They have a bigger population than Singapore, a population size of 23 million people. In shipbuilding, steel making and agriculture, they are more advanced than Singapore. However, today, if you watch the Zhong Tian TV News, we have seen many elderly people waiting for their children to finish their meals and pour over the leftover food to get some food to eat. Such a big contrast, eight years before and eight years now. How unlucky, how unfortunate they have been. If we look around us, there are many things that make us thankful. From the Taiwan

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example, we have many reasons to be thankful. We should remind ourselves that if our national leaders have made a wrong move, the people will suffer. Therefore, as Singaporeans, we should be thankful and grateful that we have a good Government.

It is true that the cost of living is hitting the pockets of many Singaporeans. Living in a small country with little natural resources, except with a lot of sea-water around us, we need to be mindful that there is really very little we can do to contain imported inflation. Many raw materials, from petrol to wheat grain to steel, we have seen unprecedented increase in prices of all materials. In this regard, the Government has been advising people to buy "house brands" to contain the high cost of living.

When I was moving around the constituency, many people asked me, "Is our PM in good health? There is talk that PM has gone overseas. Is it to seek medical treatment? Is it true that he is looking for the fourth generation leaders to take over from him?" I assured them that PM is in good health and he has been going round the constituency to attend local events. They hesitated and asked again, "If he is healthy, what is the hurry? He is only in his 50s and he can wait for another 10 years to look for a successor!" Although this is a "coffee-shop talk", to me, it reflects the concerns of the people.

We certainly feel that Singaporeans do appreciate the importance of good Government and what it means to their livelihood. The people are very sensitive and they make all kinds of comments. I urge the Government to assure the people that we do have strong and capable leaders to run the country. Concerted effort should be made to strengthen the

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leadership and leadership renewal should be ongoing. The people of Singapore are confident that the Government is always doing what it could to help the people. But, Singaporeans can be full of complaints. For example, the taxi drivers in Taiwan and Hong Kong are the same. In the past, they praised President Chen Shui-bian. Now, they scold him. In Singapore, it is the same. Our taxi drivers are full of complaints. As Mao Zedong said, "Taxi drivers in every country have something against the government." Therefore, such emotional outburst should be carefully considered by us. On our part, we should unite together to make Singapore a stronger and more resilient society. I believe we can make it happen.

I support the Budget.

*Cols. 921-924.