DEBATE ON ANNUAL BUDGET STATEMENT

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

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"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.

12.28 pm

Mr Inderjit Singh (Ang Mo Kio): Sir, thank you for allowing me to kick off the debate on the Budget. I rise in support of the Budget 2008/2009. I agree with the Minister that this year's Budget is a far-sighted one and focuses on strengthening local enterprises and investing in the people. Together with the measures announced in last year's Budget, I think we have got a good formula for future growth and sustainability. The Budget also addressed some short-term and long-term issues for lower-income Singaporeans and also the elderly.

Sir, having said that, I think the Minister missed addressing a very significant issue of rapidly rising costs, which is threatening many of our companies, as it does, for individuals. When the Finance Minister delivered his speech on 15th February, I was waiting expectantly for him to announce some long-term and short-term measures to address inflation issues, particularly for companies. I thought that the Minister was just part-way through his speech when he ended, quite abruptly, I thought.

Just as the Government helped the lower and middle-income Singaporeans through surplus-sharing package to mitigate the impact of inflation, there are also companies that are struggling to cope with the rapid increase of cost of business in Singapore. I did a quick sum of the amount of help that SMEs got this year in the Budget, and it worked out to the grand sum of $50 million, which is a far cry from the $6.4 billion surplus that the Government announced.

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I do not disagree with the Minister's focus on the longer-term issues which involve the competitiveness of our economy. I feel, however, that the Government should not ignore the immediate threats to our economy and those that our companies are facing as a result of the rapid increase in cost. This is the biggest problem for our businesses today, beyond anything that they could have planned for. It is not just the actual cost numbers but the rate at which the costs increase is an issue. Unless they survive the current cost increases, they might not have the stamina to benefit from the longer-term incentives for innovation announced by the Minister.

The central issue for Singaporeans this year, and for companies too, is the "I" word - Inflation. And I am sure that many Members of this House will focus on this in their speeches in the next couple of days.

We have heard from the Minister that inflation and higher cost of living are inevitable in a rapidly growing economy and that we should accept that they both come together. But, I think, we could have minimised this problem, though not completely eliminate it.

Singapore in the past saw many periods of rapid growth, at faster rates than the rates that we are seeing today, and yet inflation remained under control during those rapid growth years.

Some part of our inflation is imported, as the Minister pointed out, because we import everything, and things cost more around the world today as consumption has gone up and production is not catching up. But I feel that a significant part of the inflation has been caused by factors - what I call the "controllable factors" - which the Government could have managed and could have done something about. In the last two years,

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the Government had contributed to inflation by allowing multiple cost increases, both directly or through policy changes that resulted in cost increases. The end result is an era of very high cost increases and high inflation not supported by enough wage increases, especially for the lower and lower middle income Singaporeans and also the smaller companies.

In my comments today, I will talk about our overheating economy and the resulting impact on some of these areas. And, finally, I will present a wish list which I thought the Budget should have addressed this year.

Boom and bust growth policy

First, on the boom and bust growth policy. What happened to cause such a rapid rise in costs in Singapore? We seem to have adopted a growth strategy of growing as rapidly as possible in good years to compensate for periods of slower growth or recession, even if it meant a certain quarter of Singaporeans would not be able to keep up. The result of this policy is the widening income gap among Singaporeans, despite all the help that we have been given. At that time, I thought that it was a reasonable policy - the boom and bust policy. But after what we have seen in the last few years, I think we need to adjust our growth policy. The economy grew by about 7% to 8% per annum in the last four years, quicker than in the six years before that, which, I think, was around 3% to 4%. The result is an overheating economy and the symptoms and pains that accompany it, which are: runaway property prices; shortage of workers, leading to wage inflation; significant increases in the cost of transport, healthcare and other services; and inflation of food prices.

The Minister did mention that the best way to mitigate inflation is sustained rapid

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growth. But I am not sure if or how this will help. A "grow as fast as you can policy" is inflationary in nature. Further rapid growth will create a further tightening of the job market, pushing wages higher and creating more spending, spiralling upwards as cost increases are then passed on to the consumers.

Other policy decisions also contributed to the overheat. For example, the huge stimulus to the economy provided by the decision to build two Integrated Resorts together and, at the same time, having a huge infrastructure projects on transport ongoing at the same time. We could have, perhaps, chosen to do one Integrated Resort at a time, to try to minimise this impact. These programmes, which were in hiatus during the lean years, caused further overheat;

when we had money to spend, we spent a lot.

This, coupled with the lifting of anti-speculation measures, also opened up the floodgates to foreigners taking interest in the property sector here in Singapore. We saw a huge influx of foreign wealth, buying properties here and waiting to make a profit as a result.

As I mentioned, this growth driven overheating was compounded by both direct and indirect costs added or allowed by the Government. These cost increases impacted the lower-income Singaporeans more than it did the higher-income Singaporeans.

Effect of grow-at-all-costs policy on the bottom 20%

If you look at the statistics released by the Department of Statistics, or DOS, from 1998 to 2006, the annual inflation for the lower 20% of Singaporeans was higher than the inflation rate faced by the top 20% of Singaporeans. In 2006, for example, the lower 20% saw an inflation of close to 2% while the upper 20% of

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Singaporeans saw an inflation rate of only 0.5%.

At the same time, the income growth for lower income Singaporeans has lagged behind the income growth of the top 20%. More importantly, the real income, which is the income they get minus the inflation, for the lower-income Singaporeans has shrunk for the period from 1998 to 2006, falling behind the inflation. So, in reality, lower income Singaporeans have already been in a recession for many years! In comparison, for a period from 2001 to 2003, inflation was actually negative for the top 20% of Singaporeans, in other words, things were cheaper for them during these few years. For 2007, I was informed that the data that I have seen indicates that the top 20% income rose by 8.6% while those of the lower income rose by 3.4%. And taking into account the effect on inflation, I think our lower income are going to continue to be worse off.

Sir, a very significant cost increase and also one that caused a trigger of many other cost increases was the implementation of the GST rate increase by 2% in July last year.

This year, we have a surplus of $6.4 billion, the highest surplus since 1999, where a deficit of $0.7 billion was projected. This is a $7.0 billion swing. It is a pleasantly embarrassing outcome, I am sure, for the Finance Minister who had defended very strongly the 2% GST increase last year, citing reduction of Government income from other sources and the need to tap on GST to generate more money to fund Singapore's growth. I therefore feel that the Government had been too quick to increase the GST last year. It may not have been predictable when we were having the debate in the House. But in light of the booming economy which had been visible by mid-2007, the Government could perhaps

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make a late decision to hold on the GST increase by a year or two.

Other cost increases

The cost increases in the last couple of years have not helped this situation at all, and these are what I have mentioned just now as controllable costs, which the Government could have directly or indirectly minimised. I have got a long list and I am going to go through very quickly.

(a) The levy for foreign workers increased by $50 last year, in January 2007.

(b) Over 2006 and 2007, hospital, consultation and specialist charges increased in most public hospitals and polyclinics. Means testing is going to add this to the problem of middle income Singaporeans.

(c) Bus and train fares went up in 2006 and bus fares again in 2007.

(d) ElderShield premiums were expected to go up by end of 2007.

(e) SingPost raised its postal rate in November 2006. This is not Government's problems but something that perhaps they could have managed.

(f) URA increased its fees for Housing Developers' Licence in April 2007.

(g) POSB raised its coin deposit charges in 2007, effectively tripling them.

(h) HDB raised its valuation and administrative charges for valuation reports in December 2007.

(i) Between 2006 and 2007, universities, polytechnics and ITEs increased their fees.

(j) ERP charges and the number of gantries went up, and they are going up again.

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(k) Electricity tariffs went up in 2006, twice in 2007 and, again, in 2008.

(l) NETS fees went up in 2007.

(m) And now we have the increased SDF levy for companies. They have to pay for all workers rather than just the lower income workers.

(n) There was a significant increase in civil servants' salaries which triggered inflation of private sector salaries.

(o) Increase in the land rent of properties owned by Government.

(p) Mandatory hospitalisation insurance for foreign workers on employment pass and S-Passes from January 2008.

(q) New requirements for security guards to go for training and to be certified.

(r) BCA introduced new rules in the wake of Nicoll Highway accident adding to compliance costs.

Sir, the last three, I am sure, are well intended, but the timing, I think, could have been better.

Were all of these price hikes necessary? Some, of course, the Government could not do anything about, but many they could. Did they have to be effected at the time they were? Given the rising costs last year due to imported inflation, I think the Government could have insisted that these bodies take a more judicious approach in raising costs and the Government could have controlled some of these.

Sir, the "grow-at-all-costs" policy, with cost increases triggered or allowed by the Government, have worsened the income divide.

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Property

Another area that contributed significantly to the overheating economy is the bubble that is being created in the property sector.

Many Members may recall that in May 1996, anti-speculation measures were put in place to curb the upward spiral of property prices because property prices were going up at an uncontrollable rate. These were gradually relaxed over the last few years.

I believe that the lifting of these anti-speculation measures, combined with a genuine improvement in the property sector, had caused a huge speculation-driven influx of foreigners buying properties in Singapore. The Government therefore, I think, made a mistake in lifting these measures. Unfortunately, we forgot the property balloon of 1990s. Speculation is speculation, whether we are in good times or bad times. We should have been confident of our ability to drive the economy using fundamentals. So why did we have to be nervous and remove the anti-speculation measures? And this has been very detrimental for Singapore and Singaporeans.

Sir, the current Government policy for land sales has also seen the Government trying to time the market in releasing land and also it has a reserve price list method. This has not worked to the optimal satisfaction and caused larger fluctuations than what we would have liked. The policy has had a significant impact in fuelling rapid property price increases as well as creating a shortage in office space which, in fact, again, failed to time the market correctly by the land release policy.

Just to illustrate this, the Marine Bay BFC, for example, could have been released for development two years earlier. This would have minimised the

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overheat caused by the shortage of office space and the boom in the construction sector coinciding with the general pickup of the sector due to other reasons and also the time that we are trying to build the two IRs. Through 2007, we also saw many properties, both retail and residential properties being taken off the market due to redevelopment, which again reduced the supply and pushed up prices at a time when we had done more to stimulate demand. The easing of rules allowing properties to go en bloc was an aggravating factor here.

Effect on business

Sir, therefore, the effect on the businesses has been quite significant. Rentals have skyrocketed because of the severe shortage of space. Businesses have been forced to move from one office space to another, adding to a lot of costs in moving their businesses. The reason is that businesses have been unable to predict the rapid rise in property costs that they have faced in the last two years. Therefore, because they could not plan these costs they will not be able to manage if, let us say, property prices continue to be like this. This is compounded by the extra wages which they will have to pay to their employees who may be renting, and these are the foreign employers who are here and paying very high rents for their property. My fear is that local as well as multinational companies might accelerate moving their operations to lower cost destinations, if we do not have these in control. My GPC had a dialogue with industry partners and we had heard this from some of the multinationals too, not just the local companies.

Sir, in a recent report, Singapore was ranked as the 7th most expensive city in the world. While London and Hong Kong are still more expensive than Singapore, the problem this time is the rate at which

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our property prices and rentals escalated in the past two years. So while Singapore is only at the 7th most expensive position in the world, we rose a whopping 10 slots from 17th position to 7th position in just one year - possibly even the fastest rise among developed countries. I think this is a record that we do not want to be proud of. And this rate of rise is what has caused us a lot of problems.

Effect on foreigners in Singapore

Rentals, not just offices but also houses, have gone up, as I mentioned earlier. So while we attract foreigners to come and work here in Singapore, the high cost of renting a house is putting them off. In the rising market, landlords frequently increase rents in negotiations, and this is causing frustration among the expatriates who are here and the foreigners who are working here. Slowly, but surely, a buzz among the expatriates and foreigners working here is that Singapore is becoming too expensive to live in, and they do not mind leaving it if they can find opportunities in other more affordable cities. Sir, this is going to hurt our long-term plans of bringing in more foreigners into Singapore.

Effect on Singaporeans

Singaporeans living in HDB flats are also not spared. Some who have had to sell their HDB flats because they could not service their mortgage loans are stuck because HDB will not sell or rent them another flat for at least 30 months. Telling them to buy or rent from the open market is now looking impractical. Realistically, how can we expect someone who is, in the first place, in such a predicament because of financial difficulties and asking them to rent from the open market which is actually now beyond their reach?

I think the Government needs to get a better handle on the property sector. The

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two areas mentioned, which are the land sales policy as well as anti-speculation measures, need to be reviewed urgently.

In fact, I think for land sales, the Government should have a long-term constant land release plan. Without a reserve price, there may be times when the land is sold cheaper than we would ideally like, but over the long term, the land sold for higher prices in good years could have allowed us to reach an acceptable level of amount of income that we wanted from the land. We can put in place disincentives for hoarding land which developers buy from the Government for the purpose of developing. Very importantly, when the property market is weak, the Government should not panic and should instead go ahead and release the land anyway. I know that this is a new territory for the Government and we need to get used to this because I think the current method has created the problems that we are facing today.

Sir, now, I turn to the wish list for things that I hope that the Budget could have presented this year. My suggestions for solving the property sector have already been stated and I would like to go through a few things. First of all, the overheating of the economy. I think one way that we can avoid the overheating situation, particularly in the construction industry is to plan projects with multi-year visibility to allow the construction sector to plan ahead. This will require some inter-Ministry coordination. This should also even out the spikes and depressions of the market and prevent too much of overheat or downturn. I am encouraged that the Government is finally looking at freeing up some portion of the reserves to spend to benefit Singaporeans and companies here. If we can have a more predictable way of generating some of these additional incomes for Government, this could perhaps help us in our planned

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expenditure in the longer term for any of the infrastructure projects that we undertake. Whereas we are now depending on surpluses and surpluses come in good years, and in good years, spending leads to more overheating.

Second, is the issue of cost competitiveness for companies. And I have the following suggestions for the companies that the Minister could perhaps have addressed.

(a) To help fight inflation as we have helped middle income Singaporeans, in fact all Singaporeans, with 20% tax rebate. I thought that the Minister could have given a similar tax rebate to companies, as they too are facing the cost pressures that individuals are facing.

(b) The levy on foreign workers, which increased from $10 to $150 last year should be reduced temporarily back to $100. And this could be a temporary measure until everyone can get a control of the inflation problem that they are facing.

(c) Another way that we could help, which we did in the past when we faced such a scenario, was to give property tax rebate to companies as well as for JTC and HDB properties to offer rental rebates to companies who are facing the pressures of high rentals at this point of time.

For individuals at the lower income levels, I think the Government did a very good move last year by implementing the Workfare Income Supplement (WIS). I would suggest that we finetune this scheme because the problem has shifted now, cost has gone up tremendously and the ceiling that we have put in place of $1,500 may no longer be realistic. I therefore suggest that this ceiling be reviewed as quickly as possible to $1,800 or more. And the bonus from 10% to 20%, and this be given out every three

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months rather than every six months because cashflow problems are hurting Singaporeans quite significantly. I am also very happy to hear that the Minister has announced the increase of Public Assistance (PA) allowance from $290 to $330 per month. Can I suggest that we allow PA recipients to also benefit from the WIS scheme? PA recipients basically are unable to work. So whatever allowance that we give them is equivalent to their income, and if we can apply the WIS scheme to the PA recipients, treating that as an income, I think we can help them further.

Sir, the one thing that disappointed many of us was the personal income tax rates which did not come down this year. We already had the 2% gap against the corporate rate and many of us had wished that we could have seen at least a 1% tax rate reduction this year with the roadmap to reducing it further to match the corporate tax rate. And this would have helped, I believe, many of our middle income or the sandwich group of Singaporeans that we all have been worried about.

A more sustainable way of addressing inflation concerns of the middle-income earners is not by giving an unpredictable rebate like what we did this year, a one-time 20% or $2,000 ceiling, but to increase the reliefs like personal and child reliefs. And this is a realistic request simply because the cost of living has gone up, ie, the costs to upkeep yourself and your children have gone up. So the personal relief level in fact should increase, and this will help many of the middle-

income Singaporeans in a very significant way. And I would like to make this call again, which I did last year, for us to bite the bullet and zero-rate GST on essential items. Since lower-income Singaporeans are seeing higher inflation than higher-income Singaporeans, I feel that they would benefit most from such a move. The argument has been that the

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higher income will benefit more from such a move. But benefit itself is relative. The higher income may get more in terms of larger savings. But in terms of percentage of income savings, I think the lower income would see higher savings.

Sir, last year, the Government indicated that, in view of cost increases expected, the charges imposed by Government bodies would be frozen for a year - I believe until July this year. I would like to request the Minister to keep a moratorium on this for a longer period than to July this year so that we do not add more cost increases to what we have already seen in the past two years.

Sir, I next move my wish list to the transport sector and I will not add to the great transport debate that has been going on, and I am sure it would be debated during the COS for MOT. But related to the Minister for Finance, because of the past policies of releasing too many cars and not expanding the road network, we are now in this situation of very congested traffic. If we want to see fast results, I do not think that reducing COEs and increasing ERPs alone are going to help solve our problem so quickly. We need to convince people to switch from cars to public transport, and I have some suggestions to help some of these people, mostly middle-income Singaporeans, who are feeling the cost crunch to make this decision.

Firstly, the Government should offer an attractive car buy-back scheme. Government-sponsored buy-back schemes have been applied in many other countries. Some of these are, for example, buy-back of guns in Australia, fishing boats in Norway and the EU. While we do have a scheme to compensate people for scrapping their cars, the pay-out should not be in a voucher form which will then compel them to just buy another car. If we really want to achieve the objective of taking cars off the road, I

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think the benefit should be in cash. If the Government can offer attractive incentives, people may sell their cars and cars may be taken off the road, reducing congestion.

Secondly, what we could do is to encourage people to switch their current cars to weekend cars. I know that we already have a scheme to allow people to switch, but I think we need to make this more attractive so that more people will switch and they do not add to the congestion during peak hours.

Sir, finally, we should rethink about the role of taxis in our transport master plan. Currently, we are viewing taxis as a luxury item and not as basic public transport. We need to rethink this to encourage people to switch from cars, hopefully to buses, but, in the intermediate step, to taxis. One of the things that we have done is that we are going to increase ERP charges and the taxis are also going to pay higher ERP charges. I would like to suggest that the Government relook at how taxis are treated, charge them a nominal ERP rate, perhaps half of what we charge cars, because they are different from cars. While a car belongs to one person, many people ride in a taxi per day.

Sir, in summary, I feel that the ERP alone is not enough to unclog our roads. People who have cars may still pay higher ERP charges and stay on the road. The real solution is to take cars off the road and I think the three suggestions may help.

Sir, I have a concern for middle-income Singaporeans, which many Members have, for whom the current problems mean that they have to adjust their lifestyles. They are constantly preoccupied with worries, like increased ERPs, means testing, higher petrol prices,

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higher property taxes and higher university fees without the possibility of their children getting bursaries. I read somewhere that the fact is that the wages of the bottom 50% of Singaporeans have stagnated over the years, and yet cost increases continue to stretch every dollar that the Singaporean earns. The solution for middle-income Singaporeans, therefore, is: adjust your lifestyles. Sell your cars, downgrade your living. And I think this is a signal that we are giving our Singaporeans by the kind of solutions that we have been dishing out to help the rest of Singaporeans. We need to address this issue, together with the income divide issue, in a more systematic way to give Singaporeans hope that there is hope for them in a high cost-increasing environment here in Singapore.

I am sure that the question that I will be asked is that we are asking for many things in our wish list and how will the Government fund all of these things with lower taxes. I was quite pleased, therefore, that the Minister has again mentioned this year that he will be willing to review the Net Investment Income formula to help the Government increase its spending to derive more income for the current Government.

And I suggested last year, and I think we will have a debate again on this when the Constitution is amended. I would urge the Minster that before the Bill comes up, to look at the formulas that are being used by the endowment funds in the universities, particularly in the US, on how they have a very robust and realistic formula that balances present consumption with preserving the value for the future.

Sir, in conclusion, this year's Budget continues with the key and bold changes that Singapore needs for the long term. As we have seen in the last few Budgets, there are many measures put in place to address the long-term competitiveness of

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Singapore. In the short term, however, the rate of cost increases has impacted individuals and companies greatly. Many of the incentives this year will strengthen our economy in the long term. But we also need to ensure that our company and people have the stamina to survive and benefit from future growth. I have, therefore, suggested how we can assist companies and people in this short term with some measures that the Government could put in place. I have also made some suggestions of taking some heat out of the economy and the property sector. I think the grow-as-fast-as-you-can policy needs to be reviewed. If we can slow down a bit, perhaps we can manage things better. These measures should augment the Budget measures and tailor them to our present as well as future needs.

Sir, I support the Budget.

12.50 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Speaker, Sir, thank you for allowing me to speak. I rise in support of the Budget for Financial Year 2008/09 presented by Minister Tharman.

The Budget this year has heard the concerns of the ground and addresses the rising cost of living and inflation, with focus rightly on helping especially the lower-income and the elderly cope with inflation. Given the growing income gap, this is necessary. If the income gap widens too much, this will not only impact the lower income but could have implications for social cohesion.

The Budget is also forward-looking and focuses on creating new advantages and opportunities to enable Singapore to continue to compete in the global economy with emphasis on nurturing talent and skills, making innovation pervasive and building a resilient community to enhancing financial security

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in retirement. The tax changes introduced, eg, the liberalisation of the Start-up Exemption Scheme to encourage entrepreneurship, and the tax incentives for fixtures and fittings to help small businesses upgrade, are indeed welcomed.

However, given the larger than expected surplus this year, there is a desire for more. Given the rate of rising business costs, from rental to cost of raw material and labour, driven by the high growth and competitive demands for these resources, many feel that more could have been done in this year's Budget to support our local SMEs as well as businesses. Although this may seem a short-term measure, and some may fear that it would create a crutch mentality, however, given the quantum of the cost increases businesses are facing, our small businesses especially are seeking for help to manage the rapidly rising costs. For example, office rentals have increased 56% in 2007, industrial rentals by 30%, oil prices by 50% and commodity prices by 31%. A rental rebate or even a reduction of the Workers' Levy would have directly helped provide some relief for businesses. Considering that SMEs form 99% of all enterprises in Singapore and employ 62% of our workforce, any such benefit would have had a significant impact.

There has been much discussion about the surplus and how much could have been shared. The other debate is whether more could have been done to manage the rising cost better. Given the strong economic growth, could the various initiatives introduced have been better timed - for example, the GST increase, the taxi fare changes, public transport fare increases for both SMRT and buses, rise in the skilled foreign workers' levy, consultation fee hikes at public hospitals, specialist clinics and polyclinics, increases in hospital A&E charges, just to name a few of the increases experienced in 2007.

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Sir, Minister Tharman mentioned that the amendment to the constitutional framework to enable drawing more of the Investment Income from the Reserves to enhance tax competitiveness is definitely a welcome move and we look forward to understanding the details of the amendments and, I would add that, as we do this, focus should be given to enhance both the competitiveness of our local enterprises as well as to help manage rising costs. The Government's surplus-sharing package in the Budget, from Growth Dividends to top-ups of Medisave accounts and the Post-Secondary Education Account, as well as the personal income tax rebate, are again a welcome measure. But the basis for the redistribution of the benefits back to Singaporeans is giving more to the needy and the elderly. These are the right principles. However, I have been receiving feedback from Singaporeans in my house-to-house visits as well as in dialogue sessions that the use of residential address as one of the criteria to determine if one is of lower-income may not always be a fair assessment. For example, an individual may or may not own any property and live with a relative in a private property and, hence, be assessed as being better off than one who lives in a HDB flat and owns a private property as well. There is not an easy answer to this. But it is an area that will require some refinement in policy, should this continue to be used as the basis for benefit sharing in future.

Riding the waves of surplus, it would have been an appropriate time to also have channelled funds to support incentives for companies to adopt environmentally-sustainable development and practices. This would have been a boost to setting the tone for businesses on the efficient use of resources and cleaner energy sources to achieve a quality of living environment consistent

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with the rapid growth we are seeing. A simple example would be air-conditioning in our buildings. Have you ever noticed how cold it can get in our office buildings? Better temperature management, prevention of leakage and sealing, especially in older buildings, lighting, elevators, and escalators are areas to consider. There could be incentives for also retrofitting of older buildings for energy efficiency. It is always easier to look at the new buildings or look at buildings which are in the process of renovation, but incentives could be given to also encourage older buildings to be retrofitted.

As for the consumer today, there are already punitive measures in place, such as the water-borne tax, and the emphasis could be to look at the way we live, work and play and make it convenient and a part of the way of life. We could provide incentives to promote the use of cleaner sources of energy, more environmentally-friendly products, changes to some of the way of life in terms of consumption habits, transportation choices and recycling.

Before I end, I would like to touch on this point of hope. The Budget rightly recognises the long-term pillars of building and upgrading talent through continuing education and training through CET, as well as skills upgrading and encouraging innovation. The CET subsidies will now go beyond the vocational and professional training and extend to providing subsidies for part-time degree programmes, with the Government now meeting 40% of the cost of the programmes from our three publicly-funded universities and UniSIM. This will enable working professionals who have not benefited previously from Government-subsidised undergraduate education to tap on it for continuing education and enrichment. As Confucius said: "If you think in terms of a year, plant a seed. If you think in terms of 10 years, plant trees. If you think in terms of 100

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years, educate the people." This education, however, cannot just be for the young. It must continue for all ages, especially now, as Singaporeans live longer. Minister Tharman emphasised the need to give hope to all Singaporeans through education. I agree with this.

But there is one aspect that, although difficult to address, would be necessary to sustain this hope. How do we make the experience richer and more meaningful beyond the material hope? Minister Mentor recently spoke about the brain drain we are experiencing. Singapore loses 1,000 top talent yearly. Could it be that Singaporeans do not feel a strong identity to want to stay in Singapore? Could it be driven by the high cost of living? If so, then more can be done to create not only family bonds but the community network and the Singapore spirit. It is not only just about self-reliance but recognising that each has to carry his or her own weight while benefiting from the strength of the whole. Beyond just enabling Singaporeans to upgrade our skills, we must ensure that there continue to be opportunities and social mobility for all.

To support this, we must continue to have strong economic growth. For our local enterprises, we must also ensure that they do not lose the sense of hope for businesses to succeed in the light of strong competition and rising business costs. This year's Budget emphasises on the lower-income and the elderly, and it serves as a reminder and a signal that those who need support and help in Singapore will not be forgotten. But we must still continue to build on our talent base, innovate and stay competitive.

With that, Sir, I support the Budget.

12.59 pm

Mr Zainudin Nordin (Bishan-Toa Payoh): Mr Speaker, Sir, please allow me to join

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my fellow colleagues in the debate on the 2008/09 Budget Statement.

What can $10 buy us at the market today compared to last year? In January last year, I could buy chicken, milk and bread for just under $10. Today, I can still buy my chicken and milk, but, wait, I can no longer afford my bread. What has happened here? Well, it is called food inflation. It is also part of the overall increase in consumer price levels in Singapore - a 4.4% jump from last year. The price of crude oil also crossed the magic US$100 per barrel recently. This means we can probably feel its effects in the prices of not just what we eat but how we get to work or the shops or what we use to power our TV and almost everything else at our home.

Singapore is an open economy, and we cannot insulate ourselves from the effects of world-wide inflationary pressures.

Singapore will probably experience 4.5%-5.5% inflation again this year. This concerns me deeply as I believe that the lower income earners will bear the brunt of the impact. It is simple primary school Mathematics. Let me show you. Recent statistics tell us that the income of the bottom quartile has grown, but the growth is below 4%. With an expected inflation of 4.5% this year, any rise in income is quickly wiped out: 4% minus 4.5% is less than zero. What will happen if we are not able to provide them the resources to bring home the bread but they are also unable to bring home the dough?

This is why I am glad that the Government intends to return almost 85% of its fiscal 2007 budget surplus of $6.4 billion to the citizens of Singapore. Even better, it is shown that $1 out of every $3 of this will go specifically to the poor and the elderly - those who really need help. The rest of the surplus, it is wise that the Government keeps for a rainy day

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since the weatherman already forecasts rain for the coming year.

Lao Zi said, "Give a man a fish and he will eat for a day; teach him how to fish, and he will eat for a lifetime." This year's Budget shows that the Government is doing both - in fact giving the man a fish for today and teaching him how to fish for the future. I applaud the Government for this for two reasons. Firstly, for recognising that giving immediate relief to the poor will go a long way. Secondly, I applaud the Government for not compromising on its core belief that long-term solutions are the only sustainable path to uplift and bring along the low-income households. The Budget proposals that will provide more skills upgrading opportunities and that will stimulate economic growth in order to create more jobs, speak to this. The Government is also generous to the low-income and the needy in its other proposals. The Public Assistance rates for those unable to work due to old age, illness or disability will be raised from $290 to $330. The ComCare Fund will receive a top-up of $200 million this year. The $10 million fund promised by the Government last year to the community organisations to provide help to the needy will also be doubled this year. This probably means twice as many people can be helped.

This Budget is also senior-friendly. The Government's proposal to top up an amount of up to $450 to the Medisave accounts will help older Singaporeans pay their medical bills and higher MediShield premiums. The LIFE Bonus (L-Bonus) to encourage early adopters of the CPF LIFE scheme is also a step in the right direction. It is even cleverly tailored to give the elderly a headstart, since the amount of the L-Bonus will vary such that older and less well-off members will receive more. If you choose to participate in the CPF LIFE scheme, you will receive

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an income for as long as you live. Now, with this Budget, we are also saying that if you join early, that is, the first five cohorts, you can get up to $4,000 bonus top-up from the Government into your CPF account. So, is it better to spend 30 minutes standing in a 4D queue for a very small chance of winning something, or 30 minutes standing in a CPF branch queue for 100% certainty of getting $4,000? But, more importantly, I believe the CPF LIFE scheme will give you a peace of mind, and that is priceless.

However, Sir, I think the CPF Board can do more. There are over 100,000 casual workers and self-employed who are probably not going to qualify for the CPF LIFE because they cannot achieve the $40,000 Minimum Sum savings. Some of them may decide to do their own top-up but only if they have the means to dig deeper into their already very shallow pocket. Still, they are luckier than others, such as cleaners, shop assistants and house help who will probably never be able to accumulate their eligibility sum using their own earnings. These workers will have to rely on Workfare and its CPF linkage for additional top-ups. I therefore appeal to CPF Board to give these workers proper advice on how to plan for their sunset years.

Unfortunately, this picture does get bleaker. There is still a substantial number of low-income workers not placed on the CPF schemes. Recent estimates showed that only 9,000 out of 112,000 people who qualify for the Workfare Income Supplement (WIS) have signed up. This means we are not helping 92 out of every 100 people who deserve help. Let me tell you a story. Imagine spending weeks planning for a perfect surprise birthday party but the birthday party boy did not show up. Why? Because you forgot to send out his invitation card. Or maybe, you did send it to him but in a language he could not understand. It ends up that the one person you went to great lengths

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to plan the party for cannot appreciate your effort. Would you not have gone a mile to prevent this from happening? It should be the same in this CPF case. I therefore appeal to CPF Board to consider an action plan based on three O's - outreach, outreach and outreach.

But we can all learn from the three O's. In the recent roadshows that NTUC did in the heartland, it was discovered that many of the residents were not familiar with the financial assistance schemes to help the needy. Traditional media like the newspapers and TV media may not be effective outreach vehicles as low-income families may not access them. More direct and innovative methods have to be used, and it can be done.

During the SARS period in 2003, Central Singapore CDC and the Chinese Clan Association reminded the elderly using Hokkien over the radio and in person to wash their hands regularly. This is just one example of how we can tailor our outreach to our audience. It can be done. We just need to think creatively.

I have spoken a lot about the immediate relief measures. But I do in fact think that the long-term measures are more critical to making an impact on the poor. I want to focus here on the need for continuous workforce upgrading skill and development. This not only ensures national economic competitiveness, but it also ensures individual competitiveness. Some older workers have asked me, "Is it really realistic to believe that they can still reskill even if they wanted to? Is it worth doing at a late stage in life?" If you get asked the same question, please tell them Mr Mohd Rosdi's story. It might inspire them. Rosdi's father died when he was 16, leaving him as the sole breadwinner of the family. Not able to continue in school, he became a sailor. That was 26 years ago. Today, Rosdi holds a Master degree in Maritime Study and he is a lecturer at STET Maritime Education. How did he do it? By believing in his

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capabilities and the benefits of reskilling. As a sailor, Rosdi hungered for learning and signed up for the courses with the Singapore Maritime Officers Union and eventually became a Maritime Superintendent. He never stopped believing in upgrading and enrolled himself into an Advanced Diploma in Business Management, paving the way for his achievements today. For that, Rosdi was honoured last year by the WDA as a lifelong learner.

Sir, Oscar Wilde once said, "We are all in the gutter, but some of us are looking at the stars." Well, Rosdi was one of those who always looked at the stars. If you ask him, he will tell you that reskilling can be done and it is certainly worth doing. And, now, more people can do it. Thanks to the Continuing Education and Training (CET) Masterplan, the target is to increase worker training capacity from 20,000 trainees to 80,000 trainees a year and offer more programmes to more industries. I am heartened to note that the 2008 Budget strengthens the Masterplan by proposing a top-up to the Lifelong Learning Endowment Fund by $800 million this year, bringing it to $3 billion and making revisions to the Skills Development Levy.

I see the CET as part of an eco-system for workers, Mr Speaker. If workers are like trees - now everybody is going green so I am going to use trees as an analogy - and the goal is to help them grow strong and healthy, the CET's training programmes are like the important nutrients it receives from the rain and the sun. But for the tree to grow well, it also needs to find a spot with high quality soil to sink its roots for sustainable living. So, over the past five years, NTUC has been trying to till and nurture this soil which forms another key part of the workers' eco-system. NTUC actively leads the Job Recreation Programme (JRP) to achieve three angles. Firstly, more Singaporeans are able to hold on to their jobs or get into

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jobs. Secondly, they get paid more for each job that they get. Thirdly, they are proud to hold these jobs. A key pillar of this programme is our Job Redesign collaboration with WDA and other Government agencies. The Job Redesign Programme creates many more job opportunities, especially for older retrenched workers. I am proud to say that we have seen good progress in sectors other than cleaning, like healthcare and security, and the list is still growing.

While the Government and worker-advocates like NTUC are trying to build a harmonious workers eco-system, we must recognise that there will be workers who are more vulnerable than others to certain elements. Some trees end up in the shade of other trees due to factors outside their control and cannot grow well because they do not get enough sunlight. I call these "trees" the "at-risk" workers. They are the helpless, low-wage, casual and contract workers whom employers are tempted to sacrifice first in a business environment that is highly competitive, where there is a tight labour market and increasing business cost. The employers call this "achieving cost efficiencies". In fact, others might call this "worker exploitation".

I once had a chat with a general cleaner at one of the shopping centres here. He told me that he is being paid an hourly rate with no CPF and no benefits. If he has to take sick leave, he is not paid for the day. He has to pay for his meals, transportation and medical treatment. There is no vacation time. He once had to work double shifts because his finances were getting very tight. You may ask, "Why not ask for more pay?" In fact, he dares not ask his boss for fear of being replaced by someone else. There is no contract, no termination notice period, no separation benefits. He gets zero employ

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ee rights. And he is particularly anxious at the end of the year when the tender for the cleaning contract is reopened, because his bosses try to undercut the competition and compensation for the lower margins come out of the cleaners' pockets. The cleaners are, in fact, subsidising the shopping centre's expenditure on janitorial services.

I know another cleaner whose salary dropped each time the school awarded its cleaning contract to a new contractor. So far, she has had three different employers, three salary reductions, but she is still doing the same task - cleaning the same classrooms and toilets at the same school. Do not these stories unsettle you? These two cleaners and others like them are "at-risk" workers. The workers "at-risk" are not a small number. You could fill the old 55,000-seat National Stadium with them and still have 10,000 others standing in queue outside waiting to get in.

What should we do to help them grow into strong trees? It was Winston Churchill that said, "Men occasionally stumble over the truth, but most pick up themselves and hurry off as though nothing happened." It is everyone's social responsibility to help the less fortunate. Businesses which have deeper pockets and resources must look beyond the cheapest bid when outsourcing; instead, also choose the service provider based on their employment practices. The service provider employees are there to perform a service for you and contribute to your success in one way or another. Treat them as decently as you treat your own employees. You can report errant employers to the Ministry of Manpower and the CPF Board for further investigations. We must also teach the "at-risk" workers to stand up for themselves. If they feel that they have been exploited, the workers must complain to the Ministry of Manpower or the CPF Board or even to NTUC's Unit for Contract and Casual Workers (UCCW)

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without fear of reprisal. Sir, here, I would like to declare my involvement in NTUC's Unit for Contract and Casual Workers.

On the other hand, for service providers, please be reminded that your contract and casual workers are your company's "life blood". Without them, you have no business. Treat them with respect and fulfil your legal and social obligations to them.

Contribute to their CPF, give them benefits, preserve their rights, and let them upgrade their skills. Tap on the Government's training programmes to do so. A happy workforce could just be the competitive advantage that you have been looking for.

Continuous training and reskilling programmes would be critical to move people from the "at-risk" to the "no-longer-at-risk" category. However, I would understand if the cleaner at the shopping centre and others like him do not want to go for training. They are living hand to mouth every day, and a day spent in training is a day not spent earning. We cannot rely on the employers either, who may have different interests. I hope that our Government looks seriously into introducing individual initiated learning courses specifically for these "at-risk" workers, and convince them about the need for upgrading. If we are moving towards portable health benefits, why not portable training benefits too? Or, Government could encourage contract term employers and service providers to send their employees for training by allowing them to apply for absentee payroll. This would soften the blow to their bottom line.

Mr Speaker, I will continue my speech in Malay.

( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, for a long time the Malay community has faced challenges to upgrade themselves in education, work and income. This

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happens even though the Government has laid out a level playing field and equal opportunity in terms of education and jobs. Fortunately, there is a broad realisation that these challenges can be overcome through cooperation.

This is important because in order to improve the community, we not only need the administrative structure provided by the Government, but also discussions within the community on their objectives and values, and calls to take action. This can only be done by the community itself, with the Government's help. Therefore, I am proud that the Singaporean Malay community is able to make good achievements, especially in education and jobs. Let us celebrate their achievements.

In terms of education, almost 100% of Malay students are in schools. The dropout rate continues to decrease and educational achievements continue to improve. For example, Malay students who have five 'O' levels passes have increased from 15% in 1980 to 60% today.

More than 80% of Malay students are studying in post-secondary institutions, like the ITE, polytechnics and pre-universities. In fact, the Malay community is in the right track to reach the 90% mark of students entering post-secondary institutions by 2010.

We are now seeing a continuing progress and improvement in education, and this is a good development for the Malay community. The excellent achievement of Natasha Nabila Muhamad Nasir in this year's PSLE is a good example of this progress.

Buying Power

The increase in the number of middle-class Malays has increased the community’s buying power. This is

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achieved through the community’s effort to improve their education levels. As a result, more Malays now have jobs that pay better salaries, with higher skills and qualifications.

The Malay community has more young professionals due to Singapore's effective education system. They are progressive, have open minds and confident, apart from making contributions in their own careers.

They are not only successful here. These new Singaporean Malays also possess a global mind, thus strengthening them socially and economically. They can achieve all these by being competitive and working with the best in their own industries.

However, the challenge is not over. As the Malay community closes the gap with other races in education and jobs, other issues have also surfaced. I am very concerned with the Malay family life. For example, divorce among Malay families has increased. The number of children being taken care of by single parents has also increased. And, most alarmingly, the number of female teenagers who gave birth continues to increase.

The numbers are not small. Three-quarters of all divorces in Singapore involve Muslim couples. Foetuses that are not claimed due to births or abortions among Malay teenagers have increased significantly, around 225% within a short five years, from the year 2000 to 2005. Obviously, these three issues are related and form a vicious cycle. Poor parental guidance at home means that there is no one telling the teenagers to avoid pre-marital sex. These pregnancies, in addition to the pressure to get married, will lead to unhappy families, where the parents are unable to give emotional and financial support to raise their children.

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These pressures result in divorce and, once again, lead to a scenario of single parents and the lack of support and guidance.

Many cases of dysfunctional Malay families that were seen by social workers, grassroots leaders and the Government have always been portrayed as such: the fathers are not around - sometimes in jail - and the mothers have a huge challenge to take care of the child on her own. Usually, the mothers face financial problems and are unable to pay the house bills. In some cases, the children are taken care of by relatives like grandparents, aunties and uncles, who also have their own problems and cannot afford to give good childcare.

If this vicious cycle is not taken care of, it will erode the achievements of the Malay community. But history has shown that the Malay community has the ability to face and overcome these challenges.

So, what can the community and its leaders do? How can they approach families who have many personal problems? What are the assistance and steps that the Government can take to help and reduce the increasing number of dysfunctional families?

First, I feel that we have to handle this issue of dysfunctional families together. I feel that this problem has replaced drugs as the social problem today. Just as community effort has the solution for the drug problem, the same community effort, with the Government’s help, must also be the solution towards helping dysfunctional Malay families. The first important step is for the community to identify that dysfunctional families are a problem and accept it as a problem that we must overcome.

Secondly, these families need the community's help to be independent. They not only need financial help but also

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attention and guidance, like counselling and enrichment programmes. Here, the Government can provide more resources and assistance. They need to build their confidence and pride, and be imbued with the correct values, in order to encourage them to change and improve their situation.

We must not make any mistakes. This is a big problem and a very difficult challenge to overcome, but we can overcome it. When a community is faced with a clear proof that questions its ethics, value system or the whole way of life, there is but one true way to test the community's resolve. The way is through its response.

I hope that more resources can be given by the Government to help resolve this problem, and these resources have to be given to self-help groups, family service centres and also social workers, to solve the issue of dysfunctional families.

Let us approach these families that have problems and no choice. The success stories must be continued because the Malay community can achieve such success. It is our responsibility to contribute to Singapore's overall successful growth and social cohesion.

( In English ):

It will be a volatile and challenging year ahead for us, especially for the poor and ugly. I thank the Government for a Budget that is committed to preparing us well, to weather the storm and beyond it. The lower and middle-income groups are the foundation and basis of our social strata. While we have given them a shelter, it cannot be just a temporary one. We must do more to protect their rights, engage them and make them aware of the assistance and financial help available for them.

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Recently, Prime Minister Lee said during his Chinese New Year dinner at Teck Ghee about the rising food prices, and I quote him, "Bread is bread and rice is rice." Allow me to borrow his terms and add that people are not just people. We are individuals and deserve to be treated with respect, dignity and given opportunities to fulfil our potential. Each of us must do our part to make this come true.

With that, Sir, I support the Budget.

*Cols. 691-696.

1.23 pm

Mr Sam Tan Chin Siong (Tanjong Pagar): Mr Speaker, Sir, today, we count our victories and our successes. Our budget surplus is astonishingly high because 2007 was a very good year. We expected to lose $0.7 billion; instead we landed up with $6.4 billion in the black. Our forecast was wildly inaccurate but what a happy mistake it was.

So, today, as we celebrate the past, we are excited about the future. Even as we speak of inflation, cost of living, tax rebates, economic matters, I believe we need to reflect on a deeper issue, a long-term but currently unapparent issue. And I would like to go beyond the dollars and cents to talk about our future, which is also featured prominently in this year's Budget Statement.

Sir, I am talking about the Singapore identity in the long term. As a Member of Parliament, we represent our people, and we like to think that we can always rise to the challenge, but sometimes, once in a while, in our secret moments, we dream of the perfect citizen who makes our life so much easier. Who would he be? Let me try to sketch him as follows:

"He was found by the Feedback Unit to be one against whom there was no official complaint. He was married and added

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three children to the population, which our Government says was the right number for a parent of his generation. And our teachers report that he never interfered with their education. Was he free? Was he happy? The question is absurd. Had anything been wrong, we should certainly have heard."

So, colleagues, this is a parody of the Singapore system. We are neat, we plan, we work towards the future, and our people are happy. If not, we would have heard. Would we not?

I work in Radin Mas. As you would know by now, it is an old ward. Many of the people are elderly. When I go on walkabouts, there are many uncomplaining faces, they smile at me, shake my hand, and I hope they are happy. When we plan for the future, we often think of helping those who do not have enough. How do we help them? We give them a sufficient sum so that they can live a subsistence existence. Some $330 a month - a small sum enough to keep body and soul together. At the same time, we are also one of the most competitive, one of the most technologically savvy, one of the liveliest and most vibrant. For me, there is a disconnect between the two.

Today, I would like to warn of the dangers of the perfect citizen who is uncomplaining but maybe unhappy. He is, in fact, politically quite dangerous. Why do I say that?

I have spoken in Parliament of the Pensioners' Party in Israel more than a year ago. This is a party that swept seven seats in the 2006 elections. They campaigned on one single platform - in a complex and strongly patriotic country like Israel, you would think that issues such as foreign policy, education, or even security, would be the trigger. But, no, this party won on the back of one

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promise, ie, to give more to the pensioners. This is what one voter said, and I quote:

'The high cost of medicine, the cuts to the elderly, it's shameful. A disgrace. This will now end. It will spread to other places and have the largest lobby in the country."

Others believe the Pensioners got wide support from many younger Israelis who want to once again take care of their elders.

This is the political power of the people who have few complaints about the general state of their country - everything else - defence, taxes, schools - they think it is generally okay. But it is the pensions and old-age benefits that they are unhappy about.

"One man two votes": The false battle

So we had considered this political problem some time ago. One solution proposed was to give younger Singaporeans two votes, to count against the larger lobby group of the aged. There is a perceived gap between the young and the old.

But before we rush in and try to tackle this problem, the experience of the Pensioners' Party in Israel shows that the problem is not so simple. Even young people would want to vote for this party. First, because they want their own parents to get better benefits; and second, they themselves want better benefits when they get old.

So this is a party that can be hugely popular for a long time - until they deplete the country's resources and, then, we would have to think about the solutions.

So it is not the Young vs the Older People; it's the Head vs the Heart. The head knows that we have to be tight-

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fisted with welfare. It knows that we cannot afford to be generous. We must, in fact, be cruel to be kind.

The heart wants people to be free, to be happy, to have more than a plate of rice every day. It wants the poor to be rich, and the weak to be strong. And at election time, the heart sometimes rules over the head.

Now, as far as this Government is concerned, what are the lessons that we can draw?

First, we cannot under-estimate the political pressures of an aging population - that we must take into concern about retirement savings, healthcare costs and weakening family ties seriously. These are not just the concerns of the old. These are issues that will feature strongly in the future years, and we ought to tackle them now.

I am glad that our Government has introduced CPF LIFE, a form of life-long insurance scheme to take care of the old till the very end. I am also glad that the Finance Minister has allocated more resources to Ministry of Health and to the Ministry of Community, Youth and Sports. So these funds will put us in a good position to tackle future medical and social problems which may only surface 20-30 years from today.

Second, and this is perhaps the most difficult question of all: is our party and political framework strong enough to withstand the pressures that will come from the grey lobby? Many of the retired MPs have special relationships with older Singaporeans. So, is there a way to tap on their networks? On the political front, do we need a new political manifesto, for a new Singapore with a sizeable old population?

So, aging is not a 'them vs us' problem. Political problems are not ageist; they apply equally to all ages. We have to

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tackle them on this basis, and I hope the Government could consider the two points that I have made.

Who is the Chinese Singaporean?

Now, I would like to address the issue of identity along a different line. It has become fashionable to say that we are Singaporeans first, and then Chinese, or Indian, or Malay second. And there are many Chinese Singaporeans who cannot speak Mandarin well, or others at all. Some of these Chinese Singaporeans are among the country's best and the brightest.

This state of affairs we take for granted. There has been a common notion among many people that it is okay for the general level of the Chinese to be moderate, and to focus on our firepower at the high level, to create an intelligentsia, so to speak, who has strong command of spoken and written English and with perhaps elementary Chinese are good enough to keep the basic social conversation going.

There are two main points I would like to make on this topic.

First, we ought to stand against the tide of eroding standard of Chinese. The solution to the problem of sliding standard is not to lower the standard but to stop the slide! And we need to give schools more resources, more time, more teachers, and more materials to allow them to teach Chinese. And to teach it in the way that the language deserves. I know that the Primary One students now learn Hanyu Pinyin first, before characters, to make it easy for them to read. But this creates a crunch for them - how can they read novels if they depend on this anglicised Chinese?

The Internet and typed Chinese is also another problem - many online novels have Chinese characters that are

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phonetically accurate but, in reality, the words are wrong. This is the result of the dependence on Hanyu Pinyin .

Sir, I have many friends working in schools and for the Chinese newspapers. We share the same concern about the standard of Chinese here. So I hope that they do not take offence when I say that the standard of Chinese writing has declined in recent years.

This problem is at once complex and easy. Complex, because it involves the collective will of educators, policy makers, the Chinese community and the Singaporean community at large to recognise that the level of Chinese here is not what it should be, and that we ought to tackle it.

What follows is then easy - we fix the problem in the same way that we have fixed dirty rivers and narrow roads, drunken drivers and underaged drinking, imported inflation and structural unemployment.

We are good at solving problems, but we are perhaps less good at recognising them at times.

Second, we ought to take note of the rise of China. It is not possible to miss the self-evidence but it is possible to read it wrongly.

The rise of China does mean that there is an added economic dimension to learning Chinese. For example, Jimmy Rogers, an American investor has moved to Asia and his daughter speaks fluent Mandarin. I do not think they would have done this purely for the love of the 5,000 years of Chinese history or to read the Dream of the Red Chambers in its original form.

But, in Singapore, for the Chinese, we ought to have a certain pride and an intrinsic reason to learn Chinese for its

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own sake. We ought to appreciate Chinese calligraphy, painting and music. And we ought to have some rudimentary knowledge of Chinese history. All these will help greatly for our Singaporean Chinese to connect effectively to the Chinese in China, just like Jimmy Rogers' daughter. But how is it that young Chinese Singaporeans know more about the music of Amy Winehouse than Cui Jian ( 崔健 ) - the young man who picked up a guitar and galvanised a young generation of Chinese at Tiananmen?

Sir, I am not a Chinese chauvinist. I stand for a united, multicultural Singapore. But for Singapore to remain multicultural, we have to maintain the multi-cultures! And we cannot slide into a meaningless, dumbed down existence where everybody knows how to say "ni hao" and not much else.

Sir, my two questions - on the politics of a greying population and the identity of the Singapore Chinese - are not evidently important in the present day. They may strike many as so much philosophising.

Sir, I started my speech with the following lines from a poem by W.H. Auden:

"Was he free? Was he happy? The question is absurd:
Had anything been wrong, we should certainly have heard."

Would we have heard? If there is a growing discontent in the elderly, would we have heard? If there is a downside to the slow decline of the Chinese language in Singapore, would we have heard?

Are these questions absurd? Sir, I have heard, but one man cannot stand against the tide. So I urge the Government and the relevant Ministries to consider these issues and their

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consequences with the budget given to them by the Finance Minister. With that, Sir, I support the Budget for the new financial year.

Sir, I would like now to continue my speech in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, I will now talk about a number of issues concerning the people. Every year, during the Budget debate, we are most concerned about what kind of bonuses the Government will give out, whether the people can get a big ang pow or a small ang pow . Besides cash bonuses, our people also hope that the Government will implement anti-inflationary measures to help us and our families cope with rising costs.

Over the past year, the people are most worried about rising food prices, medical and transport fees, property prices and inflation. Although the size of the ang pow is not big, overall it takes care of everyone and makes sure that no one is left behind. The Government, through its five-pronged strategy, that is, appreciation of the Singapore dollar via exchange rates adjustments, diversifying food resources, home ownership, targeted help for the needy, and strengthening competitiveness, has helped to deal with inflation. These are all very carefully planned strategies. We hope that through such inter-agency and inter-Ministry cooperation we can continuously fine-tune and review our policies so that it can push for more efficiency.

Lastly, I would like to raise some of my personal comments regarding the a ng pows given by the Government.

Over the past few years our economy has achieved good growth and we have enjoyed budget surpluses. The Government will generously give out a ng pows to

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share the fruits of success with its people. This has inevitably raised our people's expectations to receive a bigger a ng pow from our Government.

According to Lianhe Zaobao's report on 17th February 2008, the headline pointed out that the people feel that the a ng pow is helpful in taking pressure off the inflation. However, it is an inadequate measure. During my meet-the-people sessions, some residents' feedback is that the Government is very rich and therefore they should give a big a ng pow ; the size of this year's ang pow is too small. Such comments got me worried.

During good economic years, the Government can share its surpluses with the people. However, will this make our people take it for granted and expect the Government to give a bigger and bigger ang pow every year? If the Government is unable to give out a ng pow due to a budget deficit, will the people become disappointed and eventually despaired? Therefore, in its effort to share the surpluses with its people, it is therefore necessary for the Government to manage the people's expectations towards the Budget's bonuses. This is just like what Senior Minister Mr Goh Chok Tong had said: "The people lack self-examination." I hope that the Government can, through National Education, educate our people and manage their expectations so that they can have realistic expectations about the Budget. This will ensure continuous growth and constant prosperity for our nation. Only by doing so can our people learn how to prepare for rainy days, take a broader view and adjust their expectations.

Sir, I support the Budget.

*Cols. 697-698.

1.43 pm

Mr Christopher de Souza (Holland-Bukit Timah): Sir, caveats lodged with URA for the Sail, One Shenton, St Regis indicate

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an average per square foot price of $2,500.

Business Times' article of 2nd November 2007 titled "Bravo buys Makeway View for $162.8m in en bloc sale" reported that "Makeway View owners will receive gross sale proceeds of about $3.7 million to $10.4 million per unit."

Accolade after accolade highlighting Singapore's meteoric growth.

Contrast this with the $1,000 per month wage of the worker who clears plates in the hawker centre.

$1,200 for 3-day F1 pass. $30 per ticket on Singapore Flyer. $50 per person for dinner at Dempsey Hill. 7% GST. Forecasted inflation rate of 4.5% to 5.5% for FY 2008.

Contrast this with a $700 per month wage of cleaners of public toilets.

Toning, training, tuning and revving the economy so that it is in a prime position for the nation's next lap is paramount but the question to ask is, "Have we made sure that nobody is left behind?"

Termed the "Bonanza Budget" on the Straits Times' front page the day after it was delivered, I think it is only fair to put on record that the Government has done a good and commendable job in developing a Budget that is highly sensitive to the needs on the ground. The Budget has, in concrete ways, tried to address the rising cost of living and the consequences of inflation.

Growth dividends; top-ups to CPF Medisave and the PSE accounts; strengthening ComCare Fund; the L-Bonus

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all help Singaporeans cope with the increase in food, living and fuel prices.

Mr Speaker, Sir, while I rise in support of the Budget, I wish to propose three ways the Budget could achieve a better and more equitable distribution of our nation's wealth without discarding the tenets of Workfare and meritocracy.

Firstly, raise income ceiling for first time buyers of subsidised public housing. The Prime Minister had stated in the 2007 National Day Rally that the maximum Additional CPF Housing Grant (AHG) would be enhanced further from $20,000 to $30,000. In addition, the household income ceiling for AHG eligibility would be raised from $3,000 to $4,000.

This has received good feedback from the ground, especially from those wanting to take the plunge into "owning" a property rather than just renting one. But the scheme has, as its target, the low income group. What about the middle income group? These are the people, many of whom are in my age group, who have crossed the household income ceiling and find it very difficult to pay the high prices of resale flats or the cheaper leasehold private condominiums, and I use that term "cheaper" loosely.

Currently, a couple wanting to purchase a 3-room flat directly from HDB must have a gross monthly household income of less than $3,000. A couple is disqualified from purchasing a 4-room or bigger flat directly from the HDB if their gross monthly income exceeds $8,000.

The middle-income couple is caught in a difficult position. For example, some of my constituents as well as peers in my age group say, "I will accept the promotion in my company but I will decline the raise so as not to breach the income ceiling." The question to ask is therefore: "Is it worthwhile turning down the raise?" Unfortunately, many of my constituents, whom I have discussions on

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this topic, and my peers have said yes, especially in a private property market which has seen prices skyrocket.

For a young couple, few things are harder or more ironic than having to slog for many years to pay off a huge mortgage for their first home just because they worked hard and were given raises early in their careers before they purchased a HDB flat.

It has been 14 years since the HDB last increased the income ceiling for new flats from $7,000 to $8,000. This was done for nuclear families by the then Minister for National Development, Mr Lim Hng Kiang, in 1994.

Perhaps the sluggishness in the property market from 1997 to 2006 justified a non-review during the same period. But, surely, the trailblazing prices of 2007 have scorched young first-time buying couples enough to jolt an increase in the income ceiling. For example, HDB records show that a 4-room resale flat at Jalan Membina was sold for $590,000 (or $609 psf); a 5-room Marine Parade flat was sold for $750,000 (or $577 psf); and an executive Mei Ling Street flat was sold for $890,000 (or $552 psf).

Where private property is concerned, Business Times' article dated 10th July 2007 reported that "Of late, 60 per cent of the buyers for most new high-end projects have been foreigners, but sometimes the figure is even higher. At City Developments' Cliveden at Grange Road, it reports, 90 per cent of the 38 units sold so far have gone to foreign buyers, with an average price of $3,600 per square foot."

Citibank's Economics & Market Analysis of June 2007 stated that the Government’s push to increase the population to an upper parameter of 6.5 million people by attracting new immigrants creates a volatile property market where foreign buying or selling

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helps drive prices up or down - the volatility of the market. As can be seen with the HDB resale market, such demand from foreign buyers trickles down the property chain causing prices to go up for lower end private property.

This affects the couples who are disqualified from buying directly from HDB due to the $8,000 income ceiling. Rising prices of resale and private properties aside, another indicator of why the $8,000 ceiling needs to be reviewed is the growing number of households who earn $8,000 or more per month.

Data from the General Household Survey shows that the proportion of resident households earning $8,000 and above every month has nearly doubled from 10.85% in 1995 to 19.9% in 2005. Granted, these statistics do not show the age of residents in each household at the time their income exceeds $8,000. Nonetheless, the figures do show that a household income of $8,000 per month is becoming less exclusive.

So, I ask: "Is $8,001 per month per couple comfortable enough a wage to exclude them from subsidised first-time HDB property ownership, bearing in mind (a) that the couple receives no WIS, less GST credits, faces an inflation rate which is rising; and (b) perhaps more significantly, that the only other housing alternative is a pricey resale flat or private condominium?"

Additionally, if the young couple is forced to saddle a back-breaking mortgage, how then can they ever strive for 'work-life' balance? Husband and wife's preoccupation will be to overcome the considerable debt and they are likely to decide that promotions at work are needed to achieve this over and above family time.

The counter-argument to all of this may be HDB's $12,000 ceiling for, what

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they call, the "Extended Family Scheme". While it is a concrete step in the right direction, is it a viable solution for the young couple? I say, not really.

And this is why under the Extended Family Scheme, the couple's combined salary must still be under $8,000. It is just that the remaining $4,000 can be made up by the wages of other children or married children. This, therefore, entrenches the $8,000 income ceiling for the recently-married couples.

The residents who live in HDB flats in my constituency are in Sunset Way, Ghim Moh and Farrer Gardens. The residents' newly or soon-to-be-married children who grew up in the these estates and who earn a household income of more than $8,000 find it next to impossible to find an affordable resale or private property close to their parents' home.

For the reasons set out, and in light of the fact that "Home-Ownership" was specifically named in the Budget as a strategy to cope with inflation, I ask the Government to seriously consider raising the per household income ceiling for first-time direct purchasers of HDB flats.

The second proposal for how the Budget can achieve a better and more equitable distribution of our nation's wealth without discarding the tenets of Workfare and meritocracy is by investing resources into beautifying Singapore's common spaces.

Space is a premium commodity in Singapore. With a new soft target of 6.5 million residents in Singapore, people are already snapping up homes near parks and nature reserves, or buying country club memberships which promise that extra amount of space. People long to be able to unwind in relaxing surroundings. But

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what about our residents who cannot afford to pay for space, who cannot afford weekend get-aways, or prime properties near lush greenery?

We need to ensure that our population has green and natural common space to unwind and recharge in. There should be no charge to enter these 'green lung' areas. Workers returning from a hard day at work should not face fees which may deter them from enjoying this common space.

Notably, in February last year, our Prime Minister mapped a vision of how we could bring out Singapore's natural beauty to the fullest, for every Singaporean to enjoy. In the same address at the ABC Waters Exhibition, PM stated:

"Imagine looking out of your HDB apartment window and instead of seeing a huge concrete canal, you set your eyes on a sparkling river with landscaped banks, with kayakers paddling in the stream, with lively play areas for children, and with boardwalks and bridges for families to enjoy outings together.”

As PM said, "This is not a far-fetched scenario." Singapore has an extensive water network that spans 14 reservoirs, 32 major rivers and more than 7,000 km of waterways, including canals and drains.

I propose that a healthy budget be allocated to beautifying our common spaces. We need not be restricted to gardens on land. The pioneer batch of 50-storey HDB blocks at Pinnacle at Duxton showcases how sky gardens linked by sky bridges are possible. We need to pump in money to make sure our common green spaces are beautified.

Since the word 'Dollars" starts with the letter "D", I urge the Government to put more "D" into the ABC scheme, so that it becomes ABCD.

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The third proposal for how the Budget can achieve a better and more equitable distribution of our nation's wealth, I submit, is to make WIS more sensitive to inflation rates.

Last year, the Government introduced the Workfare Income Supplement (WIS) Scheme to enhance the take-home pay and CPF savings of low-income workers. The Minister for Finance announced that 287,000 workers were paid WIS in January 2008.

MOF states that the WIS will more than compensate for the reduction in CPF contributions and that the prime focus group for WIS are full-time workers aged 45 years who earn $1,000 or less. However, WIS benefits will extend to a wider group - mainly, those above 35 years who earn $1,500 or less - but the benefits will be at a lower rate for this group. MOF also states that the WIS scheme will be reviewed after three years.

In light of the inflation rate, I ask, why wait three years for a review? Why not devise a formula which also pegs quantum of WIS to the average inflation rate over the immediate past four quarters?

Some figures might display this point. Currently, according to MOF's website, a 46-year-old employee earning $800 per month stands to earn a total monthly income of $977, having factored in the decrease in the employee's CPF contribution and the new additions in the form of WIS Cash and WIS CPF. Prior to the changes to CPF contribution rates and WIS, he would have had a total monthly income of $904. This means that the changes to CPF contribution rates plus the introduction of WIS have given him an increase of $73 per month. However, and this is key, of that $73, he only gets to take home $57 (as the rest is deducted for CPF). So $57 is the key figure.

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The question to ask is therefore: will an increase of $57 in the take-home pay of a worker earning $800 per month be significantly diminished by an inflation rate of 4.5% to 5.5% and including the rising costs of public transport? The answer to the question must be "yes". Assuming that his wage does not increase, should not we make his WIS component inflation proof, if not fully, at least partially?

The need for such a step, or at least a step in a similar direction, becomes starker when it is analysed along with the fact that self-employed persons and informal workers who meet Workfare eligibility criteria will be required to first contribute into their Medisave Accounts in order to receive WIS. With the WIS they already receive shrinking in worth due to inflation rates, they will have less, or worse nothing, to contribute to Medisave. This is a knock-on effect. Non-contribution to Medisave disqualifies them from collecting WIS. I have previously questioned the rationale for tagging WIS for the self-employed to Medisave contributions, but given the rising inflation rates, I prefer to work within the existing framework and ask for higher WIS, in light of inflation, in order that there will be enough for the self-employed to in fact make that Medisave contribution.

In closing, Sir, I acknowledge that the Government has done much to help ease the burden of living in an increasingly expensive society - Senior Citizens' Bonus, Utilities-Save, Rental Rebates and Growth Dividends are positive policies, to mention a few. However, among these policies, WIS has a unique characteristic - it has the direct and tangible effect of increasing a person's wage in hand. He is able to predict how much he will receive from month to month - this is to be contrasted to one-off dividend payouts.

Therefore, my third proposal coming out of Budget 2008 is for the Government

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to consider budgeting for an inflation-sensitive WIS programme.

2.00 pm

Mr Low Thia Khiang (Hougang): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, during last year’s Budget debate, I pointed out that the Government used the excuse of helping the poor to raise the GST by 2% in order to afford the Workfare Income Supplement Scheme (WIS) payment which was estimated to cost the Government $400 million a year. I believe that it was an excuse given by the Government to raise the GST. I was of the view that the Government should be able to afford the WIS expenditure without increasing GST rate. In the previous Budget for FY2007/08, the Government had projected a $0.7 billion deficit. But, now, it was announced that the Government would have $6.4 billion surplus.

The Finance Minister explained that this is due to the growth which exceeded our initial expectations. On top of that, it is also due to the unusually active transactions of the property market resulting in the increase in stamp duty collections. The PAP Government prides itself in being far-sighted. The Ministry of Finance should therefore also have been able to project the economic outlook and the trend of revenue collection under each revenue head. However, the financial status of the Government shifted from an expected budget deficit of $0.7 billion to a $6.4 billion surplus. The gap is far too wide. I would like to know if the Government has been overly conservative in its estimates of revenue which resulted in a deficit position in budget estimates in the last fiscal year, so that it could have valid reasons to justify raising the GST from 5% to 7%. If our Government continues to have such a huge

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discrepancy in the Budget estimates, it would raise the question of reliability of its budgeting estimates and would also affect the Government's credibility.

In the previous fiscal year, the Government raised the GST by saying that the money was not enough and hence it needed to dip into the pockets of the people. Since we have such a huge surplus now, by right, the Government should reverse the 2% increase in GST. I therefore propose the Government reduce the GST by 2%. Perhaps the Government does not know that although last year's economy seemed very good and the growth exceeded our expectations, not all the industries were benefiting from the growth. Some people did not receive any bonus. Moreover, the outcome of the economic growth has come with spike in the inflation rate. Many people face a lot of pressure in their lives. Even in employment, there are people suffering from unreasonable treatment; they also face competition from foreigners. A resident in my constituency has written a letter to me to tell me about his father's predicament. I will now read it out in English.

( In English ): "My father is 69 years old, was retrenched, found a job as a security guard with a security agency company. He does 12-hour shift duties at $45 per day. He has passed his medical test, obtained his NSRS test and the certificate was held by the agency. He speaks English, is fluent in Mandarin and other Chinese dialects.

Up to date, he is still working with the agency which is coming to 18 months. For Chinese New Year, he received only $20 ang pow . There is no CPF, no holiday pay. No work, no pay, no medical benefits. Overtime pay at times only."

( In Mandarin ): Sir, although this constituent's father is qualified for the WIS scheme, according to the Govern

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ment statistics, many who are eligible did not apply. I think the Government should really study the reasons why some of the eligible people did not apply. Is it because the scheme is not perfect and is unable to meet the objective of helping the low-income group? Or is it because the relevant message has not been widely disseminated? Therefore, a lot of the low-income people who are not well educated do not know of the existence of this scheme. I believe the Government should find ways to disseminate the information on WIS more extensively and consider asking the employers to cooperate by informing their eligible employees, and help them to apply for WIS scheme.

Mr Speaker, Sir, some people ask me this question: what does the budget surplus mean to us as a people? The Government has money to distribute to the people, but the people still complain. Why is that so? If the Government does not increase the GST rate, the prices may not have risen that high, and the pressure on cost of living would not be that great. If the Government could make use of the financial surpluses and the investment income wisely, to increase the expenditure on university education and health-care, when more people can afford the tuition fees easily, there would be no need for the Government to generously provide bursaries or top-ups to their Edusave and post secondary education accounts. When people need to be hospitalised, they do not have to face means testing while in sick bay. They also do not need to worry about the medical fees, or to become a heavy burden to their families.

*Cols. 699-702.

2.05 pm

Mr Seng Han Thong (Yio Chu Kang): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, I believe many of you have heard this saying “Yi Ren Yi Ban, Gan Qing Bu San”, which means if two persons share something in half, they will have a lasting relationship. It means

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that we will go through thick and thin, trials and hardship together, we share our burdens. This is the Singapore spirit. Even our Minister for Finance, in his Budget Statement, has also reflected this kind of spirit. This means that the Government has set aside money and rebates for the lower-income group and the elderly. Everybody is worried about inflation. Some of their fears are real, some are just imaginary. Generally, the people are worried about the inflation pressure, and they blame it on the GST hike of 2%, but they fail to realise that it is a worldwide situation. Now, through these rebates, we can help the poor people and the elderly who worry about all kinds of prices and even medical fees. This is not a small sum. Take, for example, the family of an ice-cream seller can get $3,200 ang pow for the whole family. It is not a small amount. It can also help them cope with the inflation and to alleviate the pressure of livelihood.

For the middle-income group and above, some of them may buy branded goods. Now, they should downgrade to buy the cheaper brand goods. Our MAS always rolls out financial management courses to guide people how to manage their finance and investments. I feel that we should also educate them about wealth management from now onwards, ie, how to manage their finances and to cope with their pressures in life. Prime Minister Lee Hsien Loong also mentioned in his New Year Message that we will give our people a small ang pow . However, a lot of people think that the ang pow is too small. It should be bigger. Actually, whether the ang pow is big or small, they should emphasise on the meaning and significance of the ang pow . They said, "Oh, the Government is distributing bread, not ang pow ." In fact, bread and ang pow are different. During the Chinese New Year, when we visited our relatives, because we were poor, our richer relatives would give us a bigger ang pow . They gave their poorer relatives

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bigger ang pows, and the rich relatives smaller ang pows . I remember our relatives always looked after us previously. They were always giving us big ang pows . Similarly, for the elderly and poor people who are more in need, they remind us that we must share our burdens with them, so that our relationship will be better.

From the announcement of our Minister for Finance, it shows that the Government has been prudent and everybody will get a share. So the concept is there. The problem is why are so many people complaining that the ang pow is too small. I feel that we should change our mindset, especially thinking that the Budget time is the time to get ang pow from the Government. Even media reporters and the public tend to ask the people, "What ang pow are you expecting?" But when the ang pows are distributed, they complain. They must know that ang pows and bread are different. We give bread to everyone so that if the people get the same bread, it is all right. But if it is different, they will complain. Therefore, our Budget must be focused on certain targeted groups of people.

During the Budget debate, we have discussed whether the ang pow is sufficient and that makes me worried. Usually, there is a saying that the wealth will not last for more than three generations and, in Singapore's situation, poverty will not be more than one generation because we are self-reliant. If everybody is waiting to receive ang pows , gradually this kind of spirit of self-reliance will no longer be there. On the other hand, poverty may last more than three generations. Therefore, as what our Minister has pointed out, we must encourage lifelong learning. The Government also subsidises the Lifelong Income Scheme and, as Mr Low Thia

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Khiang said, one of the residents in his constituency wrote him a letter about his 69-year-old father who is a security guard and did not know how to apply for the WIS subsidy. We must help these people to improve and upgrade their skills to ensure that they have a lifelong income. But Mr Low suggested earlier to withdraw the 2% GST increase. Why is it that the governments in other countries cannot give out bonuses, but we can? Maybe he does not know that, in the last few years, we have spent a lot of effort looking after the interests of these people to help them to get some CPF, especially the security guards. Our security association has helped many of the security guards, and we must help them as quickly as possible. Therefore, we see that the salaries of these workers have increased from $800 to $900. With their overtime payment, they have seen an increase in their salaries. Yes, they have to work harder, but their situation has to be improved, and we can help them to do that.

On the Lifelong Income Scheme, there is a lot of controversy. It seems to have become more and more controversial. Some said that they would choose age 65 to enjoy this income scheme and they do not want to wait until 80 years old, which is too late. So people may think that their concept is wrong. Actually, no matter what age you choose to start, it is a lifelong scheme. No matter what package you choose, it will start with a certain year. It is quite a complex concept but it can be quite simple too. You just have to choose whether it is refundable or non-refundable. Higher premium ones are refundable, but for non-refundable ones, you will pay less. So you can choose to start from age 65 or 90 or in between. And I suggest that we publicise this scheme actively via various means.

For example, ComfortDelgro, the biggest taxi company in Singapore, has done something. They have given $7 million back to the taxi-drivers to put into

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their lifelong income account. I think that is a very good effort because they can top up their lifelong income account. Although the elderly people may not have enough savings, through all these top-up schemes, they can also join this lifelong income scheme. Some people may say that $600 is not enough. In Singapore, we know that is not their only income. It is just like the nine-layered cake where we are only looking at one layer. It is just part of it. Even Minister Mah Bow Tan also said that when you get something from CPF, the Government may also top up for you. So when you are old, maybe you will get a few hundred dollars from Mr Mah and a few hundred dollars from Mr Tharman. If you add together, it could be quite a lot. It is now in the process of discussion and we will be able to see a bigger picture later. But some people may just see a small picture, and those people who see the small picture are the ones who do not understand. We will implement this means test and we will improve our public transport system. So there are a lot of schemes being rolled out. It is just that our people have failed to understand. What the Government has planned is for the long term but the people's perspective is short term. Whether it is short or long term, they are inter-related because long term is made up of short term. We must have a common understanding. Whether it is short term or long term, we must take into consideration all the concerns.

Just now, Mr Low questioned why the projected deficit of $0.7 billion last fiscal year has turned out to be a $6.4 billion surplus this year. So he asked why there is such a big gap. Last year, we projected a deficit of $0.7 billion. But what if the budget this year has turned out to be a deficit of $6.4 billion? What else would he say? If we can turn a deficit into a surplus, is that not good news? Due to unforeseen circumstances, the company may say that it is going to perform badly.

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But what if it has turned out to be better? Is that not good news? We should do what is good for the Government and good for the people, and we should all have this common understanding.

Every year, during Budget time, we have an ang pow to receive, and every year, we have good news. So we must not just emphasise on ang pow distribution. We must make sure that only the needy people get ang pow .

*Cols. 703-710.

2.19 pm

The Senior Parliamentary Secretary to the Minister for the Environment and Water Resources (Dr Amy Khor Lean Suan): Sir, Singaporeans generally welcome Budget 2008 and, in particular, the package of measures, and the strong focus on education and innovation. Those in wealth management also welcome the long-awaited demise of the death tax. To quote someone, a fitting epitaph could well be - may it rest in peace.

However, there are still Singaporeans who asked: "Why so kiam siep ?", in Hokkien , which means stingy. "Why only $1.8 billion in hongbao when we have a $6.4 billion surplus?"

But, Sir, underlying the sentiment that the Government is stingy lies the assumption that we will continue to prosper, and enjoy budget surpluses as we have done so for many years.

At a student forum organised as part of the launch of the Junior REACH Ambassadors, one ITE student asked Minister Vivian Balakrishnan if Singapore might become poor again one day.

Despite the evidence of wealth and conspicuous consumption all round us, this notion of future poverty is not at all inconceivable. This goes to the very heart of why our national budgets need to be far-sighted and prudent whilst meeting

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immediate needs. In fact, it is this far-sightedness and prudence as well as the many timely and astute policies implemented that had played a major role in bringing about such a large surplus this year. So I disagree with Mr Low Thia Khiang who said that the Government should be embarrassed with the large budget surplus. Far from it, I think we should all be happy and we should all commend the Government for doing such a good job and bringing about such a large surplus.

Ensuring that there will be continued economic opportunities is also key to motivating our young to remain in Singapore and, at the same time, attracting foreign talent to our shores. Thus, I support Budget 2008's broad stance of investing to nurture top quality human capital and businesses, while at the same time providing some relief, particularly to the low and middle-income households affected by rising cost.

But - and there are always "buts" in life - there are areas in the Budget which could be improved with the aim of deepening social bonds and raising national resilience.

I would like to highlight three areas. Let me refer them as the three Cs, namely, Cost, CPF LIFE and Competitiveness.

Cost

Inflation is estimated at 5% this year and it is expected to remain high for a while. At the same time, the income gap is the highest since 2000 with the Gini coefficient at 0.485. Hence, the lower-income households continue to be most affected by price increases.

Furthermore, home ownership might not be an inflation hedge for many low-

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income families if they are still saddled with large outstanding mortgage loans. At my weekly meet-the-people sessions, there will be at least two to three cases of low-income families who are unable to cope with their housing loans, and/or facing foreclosures. I believe this is widespread amongst other constituencies.

The Growth Dividends together with the Workfare should go some way to help them cope. But these by themselves are still unlikely to be adequate.

For the majority who are still economically active, the long-term solution must be to redesign jobs into better paying ones, and upgrade their skills to take on these jobs. WDA together with our Government agencies and the NTUC have done well in redesigning the jobs and upgrading the skills required and therefore pay levels for the workers, particularly in the security and landscaping industries.

But what about other sectors, such as retail and the building industry? The Government must put in more policies and resources to cajole and incentivise employers in other sectors to redesign their jobs and improve the productivity of each worker and, therefore, their wages.

At the same time, the Government should incentivise efforts to entice more women to return to the workforce. In fact, the key to helping low-income families cope with inflation and narrow the income gap over the long term could well lie with the women.

While the labour force participation rate for women has increased over the years to 43% last year, this is still low compared to that of developed countries. Many low-income families tend to have single breadwinners and could well do with the extra income earned by the spouse.

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I submit that significant changes will need to be made to child-minding facilities to make it easier for women to re-enter the workplace. Besides increasing the subsidy given for children attending these facilities, to make it cheaper and worthwhile for these women to work, the opening and closing hours of these facilities may have to be stretched longer.

Similar subsidies for pre-school and childcare could also be given to full-time and part-time working mothers so that more can return to some form of work. There ought also to be more after-school care facilities, preferably in the schools, so that the women can go to work with less concern for the well-being of the children.

Furthermore, there should also be a concerted effort to encourage employers to offer part-time work. The proportion of part-time employment in Singapore - 6.2% as at last year - is still very low, even though this is nearly double the figure in 1997.

In a "Barriers to Work" survey done for women in 2006, it was found that one of the impediments is the availability of flexible part-time work which allows women to juggle between family and work.

Taking inspiration from this survey, another study could be undertaken on the obstacles employers face in offering part-time work or flexi-work hours. The results provide the data and context to help enhance and fine-tune the WOW Fund to make it more attractive for companies to offer family-friendly flexi and/or part-time work.

Enhancing our financial assistance schemes for childcare, pre-school and the tertiary institutions up to the 66th percentile households will go a long way in helping, not just the low-income, but also the middle-income in coping with the

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escalating cost of their children's tertiary education.

However, I would like to ask for the financial assistance schemes for primary, secondary, JC and ITE students to be reviewed and enhanced too. Currently, the primary, secondary, JC and ITE students do receive bursaries and scholarships. But these bursaries are given to the top 25% of the cohort for families with household incomes of $4,000 and below. Whilst many community and grassroots organisations, schools as well as ITEs, with some co-funding with the Government, do provide bursaries or financial assistance to students from low-income families who do not qualify for the MOE bursaries and scholarships, our experience suggests that not all such students are covered. Often, it is precisely such students who need help as otherwise, they may drop out of school. The Government could, for instance, increase its co-funding for the bursaries given by the CCCs to such students so that more can be assisted.

In the same vein, whilst we are now putting in commendable efforts to stem the drop-out rates at the primary level, such as through the setting up of Northlight School, more could be done to stem the attrition in secondary schools which I understand is actually higher than that at the primary school level. Though the absolute numbers may not be as large, the fact is that these drop-outs with little education and skills will likely form our low-income strata in future.

CPF LIFE

Response to the CPF LIFE scheme proposed by the National Longevity Insurance Committee has so far been muted. Undoubtedly, Professor Lim Pin's Committee has done a commendable job in coming up with such a comprehensive package.

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Nonetheless, recognising the stereotyping of Singaporeans as "complaint kings", I would like to offer four reasons for this muted response.

The first would simply be because the new scheme has taken into account many of the suggestions made by the public. In fact, some have shared with me that they are actually pleasantly surprised that the Government has accepted en bloc the recommendations of the committee.

A second reason could be because many of those who objected to the earlier compulsory annuity scheme, such as the low-income workers and those who have already bought annuities, are exempted under the new proposal.

A third reason could be that there are those who are still "blur". Indeed, a number of residents and grassroots have told me that they think the scheme with so many options is too complex. In colloquial terms, they " liak boh kiew ", or catch no ball.

Finally, there are also skeptics who tell me that they think the scheme simply sounds too good to be true with the Government even agreeing to administer it. There must be a catch, and therefore, they have been trying to figure out where the catch is!

A key issue that remains is that a significant proportion of the population is presently exempted from the scheme. This comprises the one million plus CPF members who are above 50 this year, those who are of qualifying age but with less than $40,000 in their Minimum Sum and the 100,000-odd, low-wage, self-employed and casual workers with little or no CPF savings.

To encourage those who are exempted from the annuity scheme to

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sign on, the Government has announced that it will give the special sign on bonus (L-Bonus) to those who opt in.

Nonetheless, even with the one-off LIFE Bonus which ranges from $2,200 to $4,000, one wonders how many of these low-wage casual workers will eventually sign on given the experience thus far with the Workfare Income Supplement (WIS) by the very same cohort of workers.

It was reported in Parliament recently that of the 160,000 such workers that first collected the one-off Workfare Bonus, only 54,000 have signed up for the subsequent WIS. Common reasons for not signing up are that they simply cannot afford to top up the Medisave or that they do not know how it works and whether they qualify.

Additionally, the Finance Minister had said in his Budget Statement that those with less than $40,000 in their Minimum Sum and who choose to opt in must be willing to make a reasonable contribution to their balances and be willing to accept lower monthly payouts. So far, what this reasonable amount is has not been announced.

If the amount is deemed too onerous, it would be difficult to get this group on board, and it is precisely this group that are most likely to need the CPF LIFE for their old age. As suggested by labour economist, Prof. Chew Soon Beng, the Government could help top up the Minimum Sum of those who receive WIS in future to make it even more attractive for this group to opt in. Linking CPF LIFE to WIS would also further incentivise people to work.

Another significant cohort who is likely to have insufficient CPF savings to qualify for CPF LIFE is housewives who have stopped work early.

The L-Bonus together with a new separate tax relief of up to $7,000 for

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top-up to the family members' Minimum Sum could encourage husbands or other family members to top up their accounts so that they can join the scheme. Top-ups to the Minimum Sum could be considered in future for the group of housewives who come from low-income families and who do not have enough CPF savings to qualify for the scheme, so that more can join the scheme.

This is crucial, as according to a recent MCYS survey, one in three women mid-lifers has never held a job and faces the prospect of not having enough savings for her old age. To compound this problem is the fact that women have a longer life expectancy than men and hence latest statistics show that half of the women older than 65 years are widows.

Another concern about the CPF LIFE Scheme is that it currently does not take into account inflation, which will erode the real value of the payout. Hence, there have been calls for the scheme to be index linked. But I agree that complex as the scheme already is for the average man-in-the-street, indexing it to account for inflation would make the scheme even more complicated to comprehend.

Nonetheless, the CPF LIFE Scheme together with the Minimum Sum ought to be reviewed on a regular basis to ensure its continuing adequacy.

Finally, as the scheme is a complex one and many Singaporeans are still struggling to digest it, the Government would have to spare no expense in embarking on an appropriate educational campaign.

The hotline set up for this purpose should preferably be manned by staff and not be an automated voice mail system that never fails to irritate the caller. In fact, CPF Board should have staff to not

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only explain the scheme to members but also counsel them on what might suit them best, though the choice would ultimately be theirs. It should also go out to sell the scheme to Singaporeans who are exempted in order to win more converts.

Competitiveness

The third and final C - Competitiveness. Most businessmen welcome the tax incentives given in Budget 2008 to promote innovation in the long term. In fact, some have told me that it is high time we adopted a more aggressive stance, lest we lose out in the economic race to the top.

However, besides tax incentives, many businessmen have also called for more to be done in terms of nurturing an entire culture of innovation that permeates the entire business community, the academia and even the public sector, as well as closer collaborations among them.

The SMEs would also need an extra push to embrace a culture of innovation as it is estimated that more than 70% of our SMEs do not invest in R&D at all.

They have also noted that public sector officers put in charge of the drive to promote innovation and the deployment of R&D funds must themselves exemplify the motto of truly thinking out of the box when they evaluate proposals from the private sector and be receptive to untested but promising ideas, as this is what innovation is all about.

There are also calls by businesses for the Government to look into shorter term measures to help them manage costs and remain competitive. These could include rebates on property tax for owner occupied commercial and industrial premises given the steep increases in occupancy costs, which have led to

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the upward revision in annual values of many of these properties.

Businesses and individuals alike are also disappointed that the personal income tax rate has not been cut, although they welcome the one-off 20% rebate capped at $2,000. A cut in personal income tax besides the abolition of estate duty would help to further boost Singapore's competitiveness as a wealth management hub and an attractive place to work in.

Sir, on the whole, I think that the Finance Minister has been judicious in balancing competing priorities and seeking to invest in the medium and long term future, while dealing with the immediate concerns of citizens.

Sir, I am also heartened that the Finance Minister has noted in his Budget Statement that the Government will continue to monitor our competitiveness and may further lower rates on corporate and personal income tax should the situation warrant, after the amendment of the Constitution to revise the framework for drawing investment income from our reserves.

Sir, I support the Budget.

2.36 pm

Ms Indranee Rajah (Tanjong Pagar): Mr Speaker, Sir, thank you for allowing me to participate in this debate. I would like to speak in support of the Budget Statement which was obviously well thought out and strove to cater to different segments of Singapore society to try and make sure that almost everyone was catered for. I say "almost everyone" because there are some for which the Budget Statement does not cater entirely, and I would like to deal with these groups.

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In this Statement, the Finance Minister laid out Singapore's strategy for dealing with inflation, and he laid out five planks. I would like to comment on two of these - the fifth and the third planks.

The fifth plank mentioned by the Minister was that the most fundamental strategy of coping with rising inflation is to keep our economy competitive and to build up our capabilities so that we can enjoy good economic growth, and that is the best offset to global inflation. In essence, that clearly makes sense, and it works, I think, for the vast majority of people. Because the idea is, let us say one's household expenditure is increased by $100 and with economic growth such that his household income is also increased by $100 or more, then he is buffered. So, that is fine, and that takes care of the large group.

But there is a small group of people who consistently do not really benefit or at least get to receive the benefit of economic growth, and that is either the very elderly who cannot work or the very low income with low or no skills.

In a scenario where we have rising inflation, obviously, the key concerns are food and basic necessities, utilities and housing. And it is the housing aspect that I would like to touch on, because, in the past year, with rising inflation and rising prices of housing, the lower income group has been very badly affected. For this group, purchasing a house is out of the question. They do not have the money to buy a house. Their only option is rental housing, and they cannot afford to rent private property. The prices are way out of reach for them. In fact, with respect to private property, I see this phenomenon because my constituency is actually like a microcosm of the whole of Singapore. My constituency is called Tanglin-Cairnhill, which is a bit of a misnomer, because I have Tanglin, I have Cairnhill, I have Balmoral, but I also have the extreme

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opposite end of the spectrum, which is Henderson that has 1- and 2-room rental flats. So, I have the whole spectrum.

In districts 9, 10 and 11, we have this phenomenon where rentals used to be $7,000, now it has gone up to $10,000. So that group will move out of districts 9, 10 and 11, and they go into the outlying or suburban areas, where somebody previously would have paid $3,000, now the landlord can give it to somebody for $4,000. And this continues and we have this effect where slowly people are pushed out and it goes all the way down along the line until we get to the person who has nowhere else to go except the HDB rental flat.

Of course, when it comes to HDB rental flats, the difficulty is that there seems to be an acute shortage of HDB rental housing. I know this because I see many residents who come to me for appeals for HDB rental housing. In fact, I know the HDB's answer by heart. I do not have the letter in front of me but it says, "Dear Mr So-and-So, HDB housing is heavily subsidised and therefore we have to be careful how we allocate the rental flats," or words to that effect. I do not have the exact wording, but that is the general thrust of it.

I can understand, but for the resident, it is very difficult because the person has nowhere to go. In fact, I have just adopted the strategy now of sending everything to MND instead of HDB, because I thought that it would be good for them to see the number of appeals I receive. I suspect MND now thinks that they are my favourite Ministry, which they are after MINDEF, of course!

I had one resident approaching me for a rental flat, because he had been living in a bin centre. He did not have a roof over his head. He was staying in an open area where the dustbins are. He had nowhere else to go. There was another family who approached me. They could not get a

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rental house. So the family had to split up - one child was with one relative and another child was with another relative. They said that sometimes they went to the beach to stay.

The problem seems to be caused really by the shortage in available rental housing. So, I would like to urge the HDB to provide for more rental housing. I would like to ask the Government to allocate more resources towards building new rental flats. I say this because this ties in with the third plank of the Government's strategy to cope with inflation, which is the support of home ownership as a key pillar of society. Home ownership is fine provided that they can afford it. But for this group, where they cannot afford it, rental housing is something that they need urgently. So, I would ask, firstly, that the Government, in particular MND, conducts a comprehensive review of the status of rental housing in Singapore and to analyse supply and demand, just to see what the exact figures are in terms of demand. The waiting list at the moment seems to be like nearly up to 8-9 months and, in some cases, nearly a year.

The profile of people who live in rental housing is either very elderly or lower income families, usually with more than two children. Very often in those cases, there is a single breadwinner, usually, the mother does not work. Here, I would like to pick up on a point which Dr Amy Khor made, which is the need to encourage these mothers to go out to work. But their problem, of course, is that they have young children and they have to stay at home to look after the children. I was wondering that when we look at this problem of rental housing, we can design it in such a way that we make the infrastructure such that it would facilitate having childcare or after school care facilities within a group or cluster where there is rental housing. In other words, if we have three or four blocks of rental

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flats, make sure that there is always some provision where we can have childcare or after school care, because that will then enable the mothers to leave the children there, go to work and come back, and be able to pick up the children. We have to design the infrastructure to facilitate people to work and basically to get out of the poverty trap.

The other thing with respect to rental housing that I would like to ask the HDB to reconsider is the policy of requiring at least two people to live in a rental flat, if it is possible to have new rental flats where we can allow a single person to rent. I say this because I have elderly who come to see me. They went to the flat with somebody whom they knew for a long time. And, of course, one passes away or, for some reason, no longer rents the flat with them. The requirement then is that if they want to stay in the rental flat or get a new rental flat, they have to find somebody else to be a co-tenant. But it is very difficult to ask somebody who is 60 or 70 years old to go and live with a complete stranger. Many of them do not have relatives. I do not know about you, but I would not like to live with a complete stranger, even if I was 60 or 70 years old. Just because I am old does not mean that I should live with somebody I do not know - not that I would do that even if I was young.

The point I am making is that sometimes when people have housing, they do not necessarily want to be living with somebody else. They may wish to live alone. They just need a roof over their heads. In time to come, when we design our rental housing, we should take into account these changing norms in society and find a way to allow our society to develop as it is actually taking place. We have more single elderly. We have more single people who do not necessarily want to live with other people.

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This is a particular group that I was concerned about in relation to the Budget Statement. I would ask the Minister to look at this. The Minister for Finance, hopefully, will give more money to MND and MND, hopefully, can do something for rental housing.

With this, I fully support the Budget Statement.

2.45 pm

Dr Teo Ho Pin: Mr Speaker, Sir, I rise in support of the Budget.

Sir, feedback on this year's Budget has been good and positive. Many Singaporeans are pleased that the Government has provided some goodies to help them cope with the rising cost of living. The rich and middle class welcome the one-off 20% income tax rebate and the abolition of the estate duty, while the lower income group is happy to receive more growth dividends and top-ups.

Sir, I support the key thrusts of the Budget to create a top quality economy, and build a resilient community. In this regard, I would like to propose the following suggestions for the Finance Minister to consider:

(1) Encouraging environment protection

Sir, the Budget has not provided much incentive to spearhead environmental initiatives. With the global concern on climate change and its impact on human, Singapore should take the lead in championing environmental protection initiatives. We should provide more green incentives to encourage both businesses and individuals to adopt environmentally-friendly practices.

(a) Green vehicles

At present, the green vehicle rebate is not attractive in persuading car owners to

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switch to hybrid or Compressed Natural Gas (CNG) cars. To date, there are only 1,000 hybrid and 500 CNG cars. Hybrid cars still run on petrol, and thus they are not that environmentally friendly. Sir, the lack of CNG pumping stations is a serious drawback to the implementation of CNG vehicles in Singapore. For instance, out of the 3,360 public buses, only 20 buses run on CNG, and 200 on diesel adopting Euro 4 emission standards. There are far fewer green buses in the private sector. Sir, we need to address this problem urgently in view of our congested roads where more cars will have more emissions in our built-up environment.

Sir, the Government should provide more incentives or tax rebates on the vehicle registration fee and road tax for green vehicles. Higher COE rebate could also be given as an incentive for vehicle owners to switch to green vehicles earlier. In this way, we can expedite the replacement of our existing 800,000 petrol-driven vehicles into green vehicles, thus reducing air pollution drastically.

(b) Green Mark buildings and sustainable construction

Sir, as Singapore develops into a global city, there will be more new developments, more upgrading of the existing built environment, and more building maintenance activities. All these construction activities, if not properly controlled, will cause immense damage to the quality of our living environment. In addition, the use of building materials and equipment will also have an impact on the environment.

Sir, although the Green Mark Building Scheme was introduced by the Building and Construction Authority (BCA) in 2005, the take-up rate has been slow. To date, only 100 new buildings out of the thousands of buildings in Singapore are environmentally friendly. There is a lack of

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will power and incentives among developers and building owners to go green. Besides legislation, I would urge the Government to provide more tax incentives such as Green Property Tax rebate for Green Mark buildings. We should expand our Green Mark Building Scheme to include both new and existing buildings. We need not wait for major upgrading to go green - many building owners can adopt many green measures in maintenance works. For example, the town councils have been proactive in adopting various green measures in managing our HDB estates such as energy saving lightings, solar energy, water conservation bib taps, and the greening of our environment.

Sir, in addition to the proposed $150,000 Fixtures and Fittings allowance for companies, the Government should provide more incentives for firms which install green fixtures and fittings in their premises. Otherwise, the allowance will spark off a wave of environmentally-unfriendly renovation activities in Singapore. Firms will be incentivised to renovate their premises without taking into consideration the impact on our environment. To effectively encourage green initiatives, the Government can list out approved green fixtures and fittings which qualify for the allowance. I would propose a double tax allowance for green fixtures and fittings. This will guide firms to be more environmentally friendly.

(c) Green living products and services

Sir, to further protect the environment, we need to adopt green living habits in our daily activities. Many environmental groups and Government agencies have organised many activities to increase the environmental awareness among Singaporeans. But we have yet to develop a green culture among our people. Sir, knowing environment protection is one

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thing, adopting green living habits is another. We need to focus our environmental efforts to be more outcome based instead.

Sir, due to the hot and humid climate in Singapore, many Singaporeans have installed air-conditioning in their homes, and own refrigerators. These electrical appliances consume lots of energy, and incur high operating costs. Despite much effort by the Singapore Environment Council to encourage the use of energy efficient appliances such as the "4 ticks" air-conditioners and refrigerators, many consumers are not purchasing these energy-saving appliances as they are more costly. I would like to urge the Government to provide tax and import duties rebate for energy efficient electrical appliances so as to reduce the price differential between energy saving and non-energy saving electrical appliances. This will provide a boost to the use of energy-saving appliances in our built environment, thus reducing energy consumption and carbon dioxide emissions.

Sir, I am indeed very happy that Singapore has won the bid to host the first Youth Olympics in 2010. This is a golden opportunity to drive the Singapore Team spirit further and propel Singapore to be a global city. As a responsible global citizen, Singapore must do its part to protect the environment. I would urge the Finance Minister to consider providing more Government grant to make our Olympic village at NUS a Green Olympic Village, incorporating green technologies and practices so as to inculcate a green culture among Singaporeans, especially the youths.

Sir, last year, North West CDC launched an energy audit project whereby students from the National Junior College were tasked to conduct door-to-door public education on energy conservation

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to 3,000 households in our district. The results of the project were encouraging as many residents learned and applied these energy-saving tips, and saved between $20 and $70 in their monthly utilities bills. Sir, the Government should provide more resources to support all environmental groups to further their green efforts to develop a green culture in Singapore.

Sir, as Singaporeans become more affluent, there is a tendency that people will become more wasteful and consume unnecessarily. I am particularly concerned about the easy hire purchase arrangements of electrical and electronic appliances. At my weekly Meet-the-People session, I have seen many cases of families over-committing their financial means to purchase expensive electrical and electronic appliances using hire purchase arrangements. These families have eventually fallen into debt traps and suffered financial hardships.

Sir, the Government must address this problem of easy credit for the purchase of home appliances. By facilitating the purchase of such appliances, we are encouraging unnecessary consumption of resources and being environmentally unfriendly. I would urge the Government to do more to protect these vulnerable consumers, and prevent them from becoming ComCare clients.

Sir, to show Singapore's commitment to environment protection, I would urge the Finance Minister to consider setting up an Environment Care Endowment Fund where the proceeds of this fund could be used to support public outreach efforts to build a green culture among Singaporeans and residents in Singapore.

(2) ComCare assistance

(a) ComCare financial assistance quantum

Sir, I welcome the top-up grant of $200 million into the ComCare fund. This

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will further strengthen our social safety net to help more needy Singaporeans to be self-reliant. With more funding for ComCare, I wish to urge the Finance Minister to consider revising the quantum cap for various financial assistance schemes, in particular the Work Support Self Reliant (WSSR) programme . In order to help the needy to attain self-reliance as soon as possible, we need to provide more help to reduce their short-term burden. Thus, I would urge the Finance Minister to consider revising the $35 per month cap for service and conservancy charge, and $90 cap for utilities assistance for the WSSR programme in view of rising energy prices.

(b) Allowance for the elderly and the disabled

Sir, the elderly and disabled are facing a challenging time coping with rising inflation especially in transport and medical costs. Many elderly and disabled are unable to take public transport to seek medical treatment, and have no choice but to take taxis. The rise in taxi fare has posed a severe financial burden on the elderly and disabled. To be an inclusive society, we must address the needs of the elderly and disabled holistically.

Sir, I would urge the Finance Minister to be more compassionate, and grant a transport allowance to the needy elderly (ie, those holding the Primary Care Partnership Scheme or PCPS cards, which means that they have been means-tested) and the disabled. In addition, I would urge that more grant be given to expand the scope of services of the PCPS scheme to include outpatient services for chronic illnesses such as diabetes, hypertension, and heart diseases.

(c) Coping with rising inflation

Sir, I support the Government's approach to diversify our food sources to

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cope with rising inflation. We must identify a list of essential food items which require diversification of supply sources. This will not only build the resilience of our food supply but also encourage competition among suppliers.

Sir, to further address rising food prices, the Government must also enhance business competition. Promoting house brands can save money but may not lower prices. Therefore, we should instead facilitate business innovation and competition to bring prices down. I would urge the Government to increase the supply of food outlets so that consumers have more choices. Promoting business competition will definitely improve services and contain price increases.

Sir, besides food, the Government should also encourage competition among the oil and energy firms in Singapore. In recent years, the rise in petrol prices in Singapore is unusually steep as compared to the movements of crude oil prices worldwide. Maybe we should also promote house brands for petrol, and allow more house brand petrol kiosks to operate in Singapore. Simple no-frills house brand petrol kiosks can be set up near major supermarkets or outskirt areas, such as industrial estates or agricultural land, to enhance business competition.

(d) Lifelong learning

Sir, I fully support the transfer of $800 million into the Lifelong Learning Fund. With rapid globalisation and a fast-ageing population, Singaporeans will face structural unemployment more frequently. Therefore, we need to develop a lifelong learning culture among our people, especially those who are more vulnerable to changing economic conditions. To facilitate lifelong learning for adults, we need to provide easy access and affordable courses. I would propose that

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all schools, ITE, and higher institutions of learning be provided with incentives and grants to conduct adult learning programmes. Good teachers and lecturers should be encouraged to provide consultancy services to conduct these adult learning programmes. I would urge the Government to provide higher training allowances to encourage lifelong learning. In this way, we will increase the earning capabilities and capacities of the lower income groups, thus bridging the income gap.

Sir, I support the motion.

3.00 pm

Mr Gautam Banerjee (Nominated Member): Mr Speaker, Sir, thank you for giving me an opportunity to speak on the Budget.

My comments on the Budget are in three parts. Firstly, the budgeting philosophy and mindset of the Government; secondly, I will comment on what the Budget could have been in a couple of areas; and thirdly, I will highlight some of the practical difficulties that we are likely to face in implementing some of the policies set out in the Budget.

Firstly, the philosophy and mindset of the Government budgeting process. As I listened to the Finance Minister's Budget speech, I could not help but draw some parallels with the business world. After all, we are fast approaching the Annual General Meeting (AGM) season, when corporate chieftains meet their shareholders, no matter how big or small, to explain how their companies had fared, explaining the actual performance of the company versus the budget and prior year's performance, giving indications on the future, and so on.

I suppose in the corporate world, the Finance Minister would be akin to the

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Finance Director of Singapore Inc and his Budget speech would be his annual briefing to shareholders. So how well will his AGM presentation be received by Singapore Inc's shareholders, analysts, bankers and stakeholders?

For a start, everyone at the AGM would be overjoyed that the Singapore Inc Finance Director would be delivering a primary surplus of S$6.3 billion for FY07 compared to the S$0.6 billion deficit that he had previously forecast. A more than pleasant surprise.

But as one can expect in any AGM today, there will usually be some shrewd and cynical shareholders who will stand up and ask probing questions. What questions can the Finance Minister expect at an AGM? I put myself in the shoes of a Singapore Inc shareholder and came up with a few questions for the Singapore Inc Finance Director.

The first question is this, "Mr Finance Director, Sir, you estimated a deficit of S$0.6 billion last year but you are now telling us there will be a primary surplus of S$6.3 billion. How did this happen? Can I trust next year's estimates to be accurate or will it be another set of conservative estimates?"

Those with an eye for details and a penchant for numbers may well probe further. Hence, I can imagine three other shareholders taking turns to ask him questions.

The first shareholder could well ask, "Mr Finance Director, Sir, your estimate for the FY07 stamp duty collections was S$1.5 billion compared to S$2 billion the previous year FY06. Your revised estimate for FY07 stamp duty collections is now at S$3.8 billion, which is 155% higher than the original FY07 estimate. The outcome is not surprising. What surprises me is the conservative nature of your initial estimates. After all, in February 2007,

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when the FY07 estimates were presented to shareholders, the property markets, both commercial and private residential property, were well into overdrive with high levels of transactions. The en-bloc fever was raging, new developments in Sentosa and all over the island were fetching record prices. Hence, to expect 25% lower collections in FY07 from stamp duty compared to FY06 seems very odd indeed."

The second shareholder asks, "Mr Finance Director, Sir, the FY08 Budget estimates show a projected primary surplus of S$2.3 billion and an overall deficit of S$0.8 billion. Is this another conservative Budget? I am not in a position to comment on an overall basis but let me pick one item from the FY08 Budget - property tax - where the FY08 estimate collection of S$2.4 billion shows virtually no increase from the previous year. Now, given the significant increase in property prices in the last 12 to 18 months, we should logically expect this amount to increase significantly. Is there something else that we, the shareholders, should be more aware of?"

The last shareholder says, "Mr Finance Director, Sir, the revised estimate for sales of land for FY07 is S$10.4 billion compared to the original estimate of S$3.0 billion and the FY08 estimate is S$9.8 billion. I am curious as to why large and regular receipts are excluded from the overall surplus computation. In the corporate world, the accounting standards would have required such items to flow through the income and expenditure account and be included in the net income distributable to the shareholders."

Mr Speaker, Sir, I have used these illustrations to urge the Government to rethink its budgeting philosophy. The budgeting process is crucial as it is a powerful tool to influence mindsets, drive behavioural changes and plan for the future. This applies as much to individuals

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and families as it does to businesses and indeed governments. True budgeting dictates that we strive to provide accurate estimates and set realistic targets. "Exceeded budget" is a nice sounding term but, unfortunately, is often used to glorify the achievement of "soft" budgets. We must move away from this culture.

The Key Performance Indicators for those preparing Government budgets should not be unduly weighed towards prudence. Instead, we should give more credit to realistic preparation of estimates. A robust Government budgeting process is an essential management tool and helps Government make correct decisions on future revenue and expenditure policies. On the other hand, if we are ultra conservative in our budgeting process, and we see deficits instead of surpluses in the horizon, it may lead to policy decisions, which may not be the most appropriate or timely.

Therefore, it is not surprising that the Government's decision to raise GST rates in FY07 has come under the spotlight. Should the Government have raised GST rates when it continues to enjoy such healthy surpluses, not including income from land sales and Net Investment Income contribution? Unfortunately, when we were debating this last year, the forecasts on future Government revenue were way below actual. The Finance Minister had estimated total revenue for FY07 at S$40.1 billion in February 2007, his revised estimate for FY07 revenue presented to Parliament on 15th February 2008 is S$48.6 billion, so revenue was underestimated by about 21%. For capital receipts, including land sales, actual receipts for FY07 are now likely to be nearly four times the initial estimate of S$3.2 billion. Forecasting is never going to be an exact science but I believe we can and should do a much better job with our forecasts and estimates. There is simply too much at stake if our budgets are not reliable. But there is a way

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out as far as the policy decision on GST is concerned. What goes up can come down and I would urge the Government to reduce GST back to 5% as soon as is practicable and hold it at that level until such time that there is a real need to increase Government revenue from indirect taxation, which by definition is regressive. This will help check inflation, which is at record levels and put a smile back on the face of all those who are struggling with the high costs of living. The GST offset package simply does not reach out to large numbers of our resident population who are all affected by high food prices, increases in transport costs and soaring rentals.

In the corporate world when shareholders see such large surpluses, they expect to share in it by way of dividends, capital repayment and other goodies, and the Finance Director of Singapore Inc has done exactly that by announcing in the Budget how he plans to share some of the surpluses with Singaporeans. The question I have is: has he done enough for the different groups of shareholders and has he made enough investments to sustain the long-term growth of Singapore Inc?

In this regard, I applaud the Finance Minister for providing targeted subsidies for education training and worker support, the R&D initiatives, allocating more resources to the knowledge-based economy and innovation, providing assistance to SMEs, removing estate duties, and so on. In the interest of time, I will not elaborate on these. Instead, let me suggest what the Budget could have been in two areas: Promoting a cleaner and greener environment and enhancing pension schemes to attract and retain foreign talent.

Firstly, in support of a "greener" environment. Singapore is probably one of

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the heaviest consumers of energy per capita in the world. Providing substantial and targeted fiscal initiatives in this area will draw the world's attention and send the right message that we are a nation that is serious about our environment. So I believe the Finance Minister missed an opportunity to provide fiscal incentives for eco-friendly business measures.

One of these measures could have been the setting up of a national fund to promote and finance "green" initiatives, with donors rewarded by way of tax deductions. The Government could also have zero-rated GST for the procurement of energy-saving devices and give enhanced capital allowances on energy-efficient equipment used by companies. Yet, another incentive could have been tax deductions to corporates for approved programmes for carbon offsetting, for example, where a firm buys carbon credits to offset the greenhouse gases emitted when its executives fly overseas.

The second area where more could have been done in the Budget is to have made it easier for companies to set up pension schemes to attract and retain foreign talent.

Singapore remains incredibly effective in attracting foreign talent to its shores. But is it doing enough to keep them here in the long term?

The most recent population statistics suggest that more than one in five of Singapore's 4.6 million population is a 'foreigner' and that this group is growing faster than Singapore citizens and permanent residents. If we accept that not all of this one million plus group of people are brain surgeons or rocket scientists, and that fewer still receive the rich 'expatriate packages' of yesteryear, we are left with a significant number of locally employed (but nonetheless talented) foreigners working here in roles

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that are crucial to the continued success of the economy.

Foreigners currently comprise more than 30% of the employment market in Singapore. Not only has a series of Government initiatives helped to sustain this trend in recent years, now employers too are increasingly looking to foreign shores to continue fuelling their business growth.

Schemes like the Not Ordinarily Resident (NOR) provide tax breaks for foreign nationals working in Singapore and the Personalised Employment Pass (PEP) launched last year provides them with the flexibility of changing jobs whilst working in Singapore, hence, encouraging a longer-term stay. As Singapore becomes increasingly reliant on foreign talent, an important issue to consider is the cost of losing that talent - be it to local or overseas competition.

You may ask then: what are we doing to retain this talent in the long term? In view of the increasingly tight labour market, staff recruitment and retention should be top priorities for HR Directors and CEOs. This begs the question of whether companies are being truly innovative when designing reward systems for their employees. We could take it one step further and ask ourselves if the economic and legislative framework is keeping pace with the tight international labour markets and is it effective, in terms of preventing a long-term 'brain drain' from Singapore.

Sometimes, we allow ourselves to become distracted from the main issue. Perhaps, if we pause for a moment to glance up at the horizon and see the macro picture, it might occur to us that the obvious solutions can also be the most effective. In this scenario, a simple 'pension' scheme could provide a partial solution. In fact, more and more companies are favouring this strategy.

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After all, a pension is arguably one of the most committed forms of a longer-term reward and could also prove effective from a tax as well as retention perspective. Yet, despite these obvious advantages and the media spotlight highlighting people having insufficient savings for their retirement, this remains a much underutilised tool in Singapore for both attracting and retaining talent.

So, who should take the lead in addressing the problem? A recent AXA survey found that 90% of working Singaporeans feel it is their own responsibility to save for their retirement. So, how can the Government or employers play their part in encouraging savings for our old age?

Firstly, when we examine the existing employment rules, we learn that Employment Pass (EP) holders, unlike their local counterparts, are simply not allowed to make contributions to the CPF. This puts locally employed expatriates at a disadvantage.

But what about the other concessions for expatriates you may ask. When we look more closely at the very tax rules created to attract foreign talent in the first place (the NOR scheme), we see that these same rules may deter them from staying in Singapore for the long term. All the NOR incentives fall away after five years (incidentally at precisely the same time as the Personalised Employment Pass expires without an option to renew) meaning that their income tax rate may actually increase at this point. The rules may only be effective in retaining talent in the short term and may force this group of employees to reconsider their long-term options.

The NOR pension rules may not be especially helpful for one of the most important subsets of talented foreigners - locally employed Employment Pass holders. This 'overlooked' group cannot

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contribute to CPF and are not likely to be able to participate in the pension scheme from their home country as Singapore is their home country as far as their new employer is concerned.

And so, at first glance, you would be forgiven for concluding that the law is not especially helpful. However, the Government does allow for the creation of approved company "Section 5" pension plans and so, perhaps the onus is very much on the employer and employee to use the existing frameworks to make adequate provision for retirement.

The "employer of choice" could do well by taking the lead in this area to differentiate itself from its competitors. Section 5 of the Singapore Income Tax Act allows for tax-free employer contributions and for all employees to participate with no differentiation between Employment Pass holders and Singaporeans. Furthermore, employers are given considerable flexibility to determine their own contribution rates, to think creatively and to mould the plan to their existing reward philosophy. For example, contributions can vest over time, to be contingent upon length of service, continued employment or corporate performance, and this can create a more effective alignment of employee and shareholder interests.

So why then are we not seeing employers falling over themselves to offer these schemes to employees? The devil lies in the details and, if we scratch below the surface, one will discover some elements in the tax laws that may make Singapore a less attractive tax environment than some of its competitors. These are some examples:

1. Unlike CPF, employees cannot themselves contribute to a section 5 plan and so, with no personal stake in the

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plan, the effectiveness of the plan in retaining the employee may be limited.

2. When expatriates reach retirement and wish to withdraw their money from their Singapore section 5 pension scheme, the final payout is fully taxable in Singapore at the prevailing rate of income tax. This compares unfavourably with CPF distributions, which are tax-free, and indeed with the Supplementary Retirement Savings plan (SRS) which taxes only 50% of the final payout.

3. Although the gains and investment income earned within the section 5 plan are not taxed on a yearly basis, given that the final distribution is fully taxable when the retirement benefit is paid, this element of the income is "effectively" taxed and this would otherwise be tax-free, if it was from a personal investment.

4. Finally, there are many examples of Singapore’s international competitors providing attractive tax "favoured" environments for pension payouts making these destinations comparatively attractive in the long run.

So how do we make our tax rules more expat-friendly in the long term? The legislative framework in this area already exists. However, it is not widely used. So what could the Budget have done to encourage employers to move towards a longer term reward philosophy?

I have four suggestions:

1. Remove the five-year term time limit on the NOR Scheme;

2. Enhance section 5 pension plans by both permitting and encouraging employee contributions;

3. Make the same tax rules for personal investments apply to section 5 pensions and make any investment

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growth in the final payout of the retirement plan tax-free; and

4. The tax rules applying to all retirement plan distributions, ie, section 5, CPF and SRS, should be made more consistent with each other to avoid confusion.

Through these reforms, the Government could provide even more encouragement for employers to look again at this issue and help to sustain Singapore’s position as a destination of choice for foreign talent in the short and the long term.

The third and final part of my speech deals with a matter which, over the years, has frustrated both businesses and tax professionals. This is that policies and policy intent in our Budgets have generally been good but the issue has been one of implementation. It is once you get down to the detail and try to put the policy into practice that you realise that things are not as easy as they first seem.

Let me give Members an example. Claiming a tax deduction or capital allowance in respect of expenses incurred on fixtures, fittings and installations has been the subject of great debate over the years. Generally, expenditure laid out on capital assets which form part of the building will not qualify unless the building itself qualifies as an industrial building. What does and does not form part of the building can be subjective.

To put the controversy to rest, at least up to a certain level, this year’s Budget grants a special allowance for all expenditures incurred on fixtures, fittings and installations. The special allowance is subject to a cap of $150,000 every three years and must be incurred any time over the next five years. However, it is worth noting that expenses relating to “structural works” and “expansion of space” have been excluded and such

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expenses would not qualify for the above special allowance. The issue of whether fixtures and fittings are “structural works” or “expansion of space” could be contentious. In short, it is not entirely clear what has been given away with this initiative. Just because an asset is fixed or attached to a building, does not mean it forms part of it.

Given the cap on the expenditure and maximum potential tax savings of S$54,000 over five years, would it not have been more effective just to say that all capital expenditure in relation to improvements of business premises would qualify for an allowance up to that level? This would make implementation a breeze and save time and effort, given that most of the beneficiaries of this incentive would be SMEs.

Another example is R&D. This is defined in the Income Tax Act as meaning “any systematic or intensive study carried out in the field of science and technology with the object of using the results of the study for the production or improvement of materials, devices, products, produce or processes but does not include:

• Quality control or routine testing of materials, devices or products;

• Research in the social sciences or humanities;
• Routine data collection;
• Efficiency surveys or management studies; or
• Market research or sales promotions.”

Fairly comprehensive, you would think. But there is significant room for disagreement over what it entails, and there will undoubtedly be significant “discussions” over scope and definition with the IRAS. The general concept seems to be that only companies that

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employ teams of technicians and scientists in white coats, eg, pharma or oil companies, carry on R&D. But in actual fact, many companies do it in a less organised or obvious way and this may well make it difficult for them to claim the R&D incentive which they are entitled to.

Another point I have on the R&D incentive is that, given our very broad-based and increasingly knowledge-intensive service economy, why be so restrictive? For example, we have a large food and beverage sector, which spends a lot of money on very worthy R&D projects but is presently excluded from claiming any R&D incentives. Similarly, companies in the service sector, which come up with innovative new processes to increase productivity and reduce our dependence on scarce labour resources, should qualify for R&D incentives.

My point is that when the Government clearly wants to incentivise and give something back to companies, let us do so with a more "belt and braces" liberal approach to policy implementation. I would ask that thought be given to how we do this. It would be good if we no longer have to harbour the notion “Nice policy, shame about the implementation”.

One way for the Government to do this is to prompt the agencies that have shaped some of the policies in the Budget to give more support in obtaining more liberal interpretations from the IRAS. Alternatively, instructions could be given to the IRAS direct as to how liberal they want the interpretations to be. In the context of the Government’s very healthy financial position, it is clear that the IRAS does not need to nickle and dime, slice and dice everything that seems to be saving on tax. A more liberal interpretation of policy by the IRAS will also save on taxpayer time and money, and ensure that policies are implemented in the spirit they were conceived.

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With this, Sir, I support the motion.

Mr Speaker: Order. I will take the break now. I suspend the Sitting and will take the Chair again at 3.50 pm.

Sitting accordingly suspended

at 3.27 pm until 3.50 pm.

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Sitting resumed at 3.50 pm

[Mr Speaker in the Chair]:

ANNUAL BUDGET STATEMENT: Debate resumed.

Miss Penny Low (Pasir Ris-Punggol): Mr Speaker, Sir, the Finance Minister has aptly themed the Budget as "Creating a top quality economy, building a resilient community."

As our economic restructuring efforts in the early 2000s start to bear fruit, our Gini coefficient also rises. Hence, it is vital that every annual budget aims at sharpening our economic saw but also sealing our social fabric. This, indeed, is the only way we can enjoy a sustainable growth. I have thus decided to theme my speech today on the subject of sustainable growth for this is the long-term challenge that faces Singapore and our annual Budget should address. I will approach it from three main areas: (a) economic sustainability; (b) social sustainability; and (c) environmental sustainability.

(a) Economic sustainability

I will be highlighting three aspects. First, on the steep rise in the cost of doing business and the cost of living. Through many roundtables and feedback sessions, including those conducted by the MICA GPC, the Finance, Trade and Industry GPC and so on, it soon became very clear that although specific industry concerns could be different, there was a loud common theme that rang through all

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the roundtables and this was the steep and rapid rise in the cost of doing business in Singapore. Rentals for both offices and residences have sky-rocketed, prices of energy, industrial raw materials and food prices have soared. It could be said that a large part of this was imported inflation, but the slew of fee increases across Government agencies, transport and rental increases, coupled with its leading effect in the marketplace, add to the overall increase in prices. Are all these domestic increases necessary or timely?

The Minister for Finance also outlined three main measures to tackle inflation. First, to allow the Singapore dollar to strengthen, to actively seek diversified sources of supply and grow the economy competitively. These are good measures, but not without their limits. Strengthening the Singapore dollar benefits imports and holiday trips abroad, but it will erode our global competitiveness. Expanding sources of supply is simultaneously met with the global rise in demand and the latter looks set to win the battle, at least in the mid-term. And, in a way, both measures have external factors which are not necessarily controllable by us. On a broader consideration, however, China and India's entry onto the global arena poses some new challenges for the established economies. And it seems that the inflationary pressures of these structural global changes are strong and long-lived. Hence, the question is: have we looked at what we may be able to manage domestically, to contain or even slow down the inflationary pressures? What fiscal measures and incentives have we really put in place to address these factors?

Some suggestions from the people include cost reduction in terms of onerous form-filling, especially for grants, which are required by some Government agencies. But I think those are small measures. The bigger savings and cost containment could also come in the form

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of a better analysis of the business supply and demand chains to highlight gaps, opportunities and streamline business processes. An example is the Japanese building industry that designs room sizes according to pre-cut tatami sizes, thereby fully utilising each piece of the raw materials. This saves time and resources. In contrast, our local contractors often have to cut, re-cut, waste tiles and waste time to fit the rooms. Just imagine the possible savings on a nationwide scale. Incentives could also be given to encourage designing of innovative utility models for effective cost-sharing schemes which will bring relief to demand for manpower, rentals and even raw materials. This will particularly benefit the more than 130,000 SMEs in Singapore. Hence, I am heartened by the budget incentives to broaden and deepen our economy via the R&D and Innovation Fund. Of particular mention is to set aside $90 million to drive innovation in public services. There was also a mention about appointing a Chief Innovation Officer (CIO) in every Ministry to drive and coordinate this process. It sounds good and many are excited by it. But many also asked: what would the CIO really do? Would he be a paper driver who impedes innovation, or one whose KPI is the number of experiments driven? Would he be a seasoned industry player or a fresh face graduate? How can both the private and not-for-profit organisations work with him effectively? Mr Speaker, Sir, I hope the Minister can clarify what constitutes innovation. Is it restricted only to the for-profit world and what is the mandate of the new CIO?

In addition, I think incentives could also be used to cultivate good consumption habits amongst our residents to cut down, for example, food wastages or unnecessary consumer goods consumption, which I think are also the chief culprits in driving up the cost of living. It was reported in the Straits Times that around the Chinese New Year, our good

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old garang guni men were finding one-year-old LCD screens, new sofa sets and so on being dumped. At restaurants and food courts, it is also a common sight to see food being wasted. Is this sustainable in the face of rising costs? Could we do more to cultivate good consumption habits? Would this also not lead to more money for investments and retirement funding? I think there could be some budgetary measures to address some of these concerns.

Next, let me move on to financial services and financial sector sustainability. To boost our wealth management industry, the Budget killed the controversial estate duty once and for all, and introduced tax exemptions for family-owned investment holding companies. Together with various schemes in the pipeline to boost our retirement funding market, Islamic banking and more new wealth flowing into Singapore, the financial service sector is set to become a cornerstone of our economic pie. Various aspiring banking and financial sector incentives were renewed and enhanced, including the debt and the derivatives market. Given our increasing exposure to the weaknesses of the global financial system, the US sub-prime loan crisis, and increased use of derivatives which are sometimes so complex that even the distributors themselves do not understand but may not care anyway, has the Government looked at our risk exposure? Have we determined the weak links between the products and in the global financial system and put in place measures to address them to safeguard our financial system and our retirement fund? In short, is our increasing exposure to derivative markets and products and the global financial system weaknesses a sustainable one?

Next, let me move on to the manpower gap. Our unemployment rate

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fell to a low of 1.6% or so in 2007. With the coming F1 in 2008, IRs in 2009 and the hosting of YOG in 2010 - and I would like to congratulate the Prime Minister and the team behind the successful bidding of the Youth Olympic Games (YOG) - the employment outlook is strong across the sectors. The quarterly survey data before seasonal adjustments showed that 54% of Singapore employers plan to hire and only 2% plan to retrench. Given the tight labour market, a price war could erupt and those with deep pockets would stand to benefit while SMEs might suffer. Overall, it might not be a net gain. What measure is the Government putting in place to ensure that our continued expansion and diversification are sustainable? According to Mr Gonan Hultin, who is the CEO of Caden Corp and a former Assistant Secretary-General of International Labour Organisation, in a global employment outlook comparison, Singapore finds itself in a slightly strange group. The only other countries that post hiring intentions at the same level are Peru, Argentina and India - in other words, the emerging economies. The same situation has persisted now for close to a year and a half and points to a serious labour shortage. Anecdotal evidence confirms this and many enterprises actually reported forfeited business opportunities because job vacancies remain unfilled. Some published interviews put the figure of lost business at as high as 20%-30%. The big question is: what are the micro dynamics of the labour market? Are the education and training systems well attuned to our needs? If so, the high level of hiring intentions should translate into a strong upward mobility of the indigenous Singaporean labour force. I have not been able to verify this from the labour market data, but I am doubtful that this would be the case.

I base my doubts on two reasons. One, the 4th quarter 2007 employment situation report published by MOM

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confirms strong employment growth in 2007 at a level of 236.6 thousand. The majority of this, about 144.4 thousand are, however, filled with foreigners. The situation may be starker because the 92,000 locals also include PRs. Second, the housing cost in the open rental market which caters for fairly affluent non-Singaporeans, has increased sharply, indicating a strong influx of foreigners for the high-skilled and high-paid jobs. All of these point to the fundamental need for education and continuous training and upgrading of skills. This is not big news but it is urgent news. In the coming 10 years, China and India are expected every year to add 8-10 million high-skilled jobs. Their combined total annual university graduation capacity is around 6-7 million graduates. Research shows however that only one in 10 Chinese graduates is up to the competency expectations of global businesses while, in India, one in four meets the global standards. This will lead to a serious shortage of high level talent in the global labour market. Attracting foreign talent is a competitive cost benefit consideration. Countries and companies will need to rethink their talent attraction and retention strategies.

This could range from having an adequate supply of good quality international schools, which I think we have heard a chorus from the employers that there is a lack of good quality international school places for their children. We need to also continue to enhance our liveability as well as to up our schemes in attracting top-notch talents to Singapore, because the best attracts the best. Clearly, the current factors might stack up favourably for Singapore. But the question is: how long can it be sustained and how sustainable are some of these cost increases that I referred to earlier?

Also to note is our increasing dependence on all things foreign. Not only are we subject to global competition for commodities, our economy is increasingly a function of foreign influx. And, again,

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the consequences, amongst many, are the following:

(1) There will be an increased rate of imported inflation via commodities and manpower imports, and especially with the rise of the big countries;

(2) There will be increased exposure or vulnerability of our economy; and

(3) There could be a possible fall in the standard of living amongst our lower educated or lower income groups, our ageing or disabled population, as we compete for the scarce goods and services. I think this has dire implications for nation-building.

I would suggest, therefore, that we continue to invest in education, not just any education but high quality education; intensify our efforts to stem brain drain; and perhaps think about economic restructuring to something that is sensible and sustainable, less dependent on numbers, more dependent on high value-add industries that focus on value creation, vis-a-vis value distribution.

I have mentioned before the case of Iceland with a population of 300,000, yet managed to achieve one of the highest income per capita, highest education level in the world. And, of course, amongst them, are pop stars as well as Nobel Laureates. I think there might be something there that we could further study and understand how to create a very high value-add industry and economy without always having to look at just the quantity or the numbers.

Third, I think we could also look at paradigm change to unlock the potential of the underutilised approximately 20%, maybe even to 30%, of our population which comprise the stay-at-home mums, stay-at-home pops, the ageing and disabled population. We should find ways

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to help them find their strength and value-add their skill sets so that they can be reconnected to the economy. This will be good for the economy as well as good for household incomes, and surely a confidence booster for the individuals. But this will require bold, daring and innovative thinking. I would like to quote here a story of Ms Judy Wee. Judy was former President of the Handicaps Welfare Association. She sits on a wheelchair. I have known her for many years and she is intellectually as capable as anyone I know. Yet, whenever she asks for a job, she tends to get a marginalised job at a marginalised pay because of her physical condition.

Just before I went to the US, she handed me a card. It was a business card which says, "Consultant". I asked her, "What consultant have you become?" She said, "I have decided to become a social entrepreneur and I have decided to become a barrier-free access consultant, because that's my competitive edge. I can do it much better and I know the difference between the height of these stairs and the height of those stairs." I thought that indeed is a new way of thinking. It is innovative. It adds value and it leverages on her natural competitive advantage. We are, I think, a land of opportunities and possibilities, but I hope that we are such for all and not just the more able part of our society.

Sir, I am glad that building a resilient community is high on the agenda of this Budget. Past Budget measures, like the excellent Workfare Bonus that promotes self help and mutual help, promotes a hand-up, not a hand-out, mentality. This Budget allocates additional funds to self-help groups, CDCs, PSEA and CET. These measures are welcome, but more can be done to promote self reliance and a resilient community. Judy belongs to this new breed of social entrepreneurs who

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are filling the gaps of market failure and social needs with innovative solutions. I will elaborate more on social entrepreneurship during COS. But, here, I would like to focus on the income divide and the rising Gini coefficient as well as building a social contract.

In fact, if we look around the world, we see the world and Singapore at its wealthiest point in history. This implies that we are living more comfortably and have more to share with our neighbours. Yet, we experience a sharp rise in our Gini coefficient. Technology, on the other hand, has never been as affordable or accessible as before. This implies that any physical or even mental impairment can be bridged via technological means. Yet, there is a digital divide instead of a digital bridge. I think unless there are deliberate measures, a certain segment of our population, including the aged, less educated, less able, will be further marginalised. We need more budgetary measures to tackle this.

However, we do not need more hand-outs, not goodie bags, not ang pows . We need more innovative hand-up measures where everybody counts and everyone is a contributor and a giver. We have to allow people to live their lives to the best of their ability and to live dignified lives regardless of their physical or mental conditions. Indeed, what we have done in the past few years is to review our social safety nets and move increasingly towards, eg, from welfare to workfare; from self-insurance to national insurance schemes; from 100% home ownership to "shelter guarantees"; and, of course, increasing dollars pumped into the multi-billion-dollar education and reskilling funds.

I think we can continue with our social and economic engineering approach to achieve these incremental improvements, but we can cultivate a literate and inspired nation that can truly think out of the box,

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cross pollinate ideas to achieve quantum leaps if we dare try something bolder.

Next, I would also like to touch on updating our new social compact. Social activism in the global scene has moved from the flower power or the hippie culture in the 1960s, where street protests and anti-establishment culture were hip and cool, but could be destructive. Today, the more enlightened non-profit organisations and even businesses that spot social missions are looking at the 4Ps approach - 4Ps, meaning people, public, private partnerships. They decided that the 4Ps working together can produce systemic change which is sustainable, rather than become opposing forces that discount and discredit efforts. The new model also builds social capital, as it is fundamentally based on trust and common destiny. This is evident in the rise of global corporate citizenry, rise of the citizen e-voices, which are fast walking out from just the digital media into the streets in many forms. NGOs are one. I think there are some lessons from the current US presidential campaign as well as our neighbour, Malaysia's general election where blogs and e-technology are used to campaign and garner for votes as well as funds.

While the private and people sectors seem to understand the winds of change, in most countries, it is the third P, which is the public or government sector, that is falling behind. Perhaps the new social contract calls for an update of the role of the Government. I think the Government cannot be a provider of all goods and services to feed its citizens. Rather, it is a facilitator to educate, empower and enhance its citizens' ability to be the best that each citizen can be.

Last year, I called for better resource allocation into the civil service to build an entrepreneurial and innovative culture, so that we do not just follow law. This has been acted on. This year, it should not be

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unreasonable to expect some cultural changes within the civil service sector. For one, the Government should re-examine its top-down approach and genuinely promote a bottom-up approach. Many volunteers in the NPO sector, which is the non-profit sector, as well as those Ministry-linked associations and committees have reflected an increasing frustration when dealing with the Government officers who have sought their expertise to form committees but yet, on the other hand, subject them to cumbersome approval processes or decisions that do not quite reflect the concerns of the committees. They do not feel that their inputs are treasured nor their time useful. Many such experts, including top ranking professionals and entrepreneurs, have also quoted incidents where the committees have successfully kick-started an initiative only to be overwhelmed by enthusiastic civil servants taking over the steering wheel and driving it into obscurity, or with a new load of passengers.

I am not sure whether there is a culture of "we can do it better than the private sector" in the Government. The knee-jerk reaction is 'no', but the chorus of frustrated volunteers cannot be ignored, and may be anecdotal of the presence of a systemic issue. Before the "yellow pages rule", we used to hear this comment from the business sector. Now, we are hearing a chorus from the non-profit sector. This, again, has alarming implications on the social contract between citizens and the Government, and I think that is detrimental for nation-building.

There appears to be a lack of appreciation and graciousness for first movers and volunteers from professional and other sectors. I urge urgent attention and relook at the implementation details of some of the Government-led initiatives, and redesign the KPIs to foster a strong social contract.

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Last, but not least, let me move to the third sustainability issue, which is environment. Last year, both the annual budget and the Government agencies delivered an excellent report card on green incentives and our ability to attract some of the biggest green investments into Singapore. This presents a golden opportunity to anchor Singapore as a green hub with green opportunities and green demand. Many industry players had waited with bated breath for the Government to unveil more measures in this Budget, but they were surprised that there was no "green light" to build on our momentum and signal our intentions. The onslaught of comments and articles in the media as to how we can enhance our green industry and how each individual can play a part and benefit from the green efforts serve as a testimony to the people's will. I hope the Minister, in his reaction to the budget debate, can enlighten us with some green light, both on the industry side as well as the household end.

Mr Speaker, Sir, sustainable growth is not just a buzzword. It is for our long-term survival and should be adopted as a core value by individuals, communities and businesses. Leadership is needed at every level.

Budgetary measures need to move from just fiscal and monetary considerations for building an economy, and just adequate welfare measures for the less advantaged, to strengthening the fabric and soul of a nation. We are in the watershed years where the new social compact is being crafted, either by design or by default. Government needs to take careful heed of this directional change. I therefore urge more attention, and definitely more funds that are big, bold and friendly, to be poured into the non-profit sector, to build the social capital and cultivate a desirable social compact

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for our nation. Only then can we create a top-quality economy and build a resilient community.

Mr Speaker, Sir, I support the Budget.

4.14 pm

The Minister of State for Health (Mr Heng Chee How): Mr Speaker, Sir, the Minister for Finance has delivered a Budget that, in my view, cares for the lower income and the elderly, is considerate of the needs of the middle income, and which strengthens the future of Singapore. For today, I will keep my speech brief. I will use 3Ps to describe the Budget.

The first "P" is that of prices. Others have used "I" for inflation. So, "P" for prices - same thing. We all agree that inflation

as experienced in Singapore, last year, was high, and higher than the past many years. And with high inflation, it affects workers, households, businesses, everybody. So the package that has been delivered in this Budget by the Finance Minister, in terms of the sharing of the dividends and the various other measures, including the measures to cope with inflation, has been welcomed by the ground. But, at the same time, they look forward to seeing how the trends develop and whether or not they would actually be able to manage well and obtain the relief for themselves.

The Finance Minister gave us five ways to deal with this inflation - exchange rate adjustments, diversifying our food sources, home ownership, targeted help at the needy, and strengthening competitiveness. I completely agree with him. These measures, when you take them together, basically allow our people to earn the money and at the same time allow the dollar to be stretched for value. The labour movement has also been doing its part. For example, NTUC Fairprice has offered that extra 5%

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discount, taking into account the situation that is being faced by Singaporeans and understanding the need for the entire country to come together, not only the Government but also the businesses and the people, in making the adjustments.

As far as the people are concerned, I understand that with your money now buying fewer things, as Mayor Zainudin has given the example, people are saying that somebody ought to either bring down the prices or give them more money so that they could afford the same. I can understand that. But, at the same time, I say this is also an opportunity for all of us because when inflation hits us like that, we actually have a freedom - and that freedom is a freedom to re-look and to choose our spending patterns, and what we spend on. I think that there is actually a place for simpler living. And simpler living is not necessarily the same as downgraded living. It can bring you much financial freedom. It can also bring you a little more peace of mind.

But, at the same time, I would want to say that with the inflationary environment, workers are concerned. They are grateful for the help that has been given out but they also hear things in their work places. They also read things in the newspapers: rising office rents, higher energy prices, higher raw material prices, and so on. So they hear these and they hear these repeated by the management of the companies. And they ask: what will be the impact? Yes, there may be the GST offset package that helps me cope with the GST increase and there might be some of these other measures, like the dividends. But what actually concerns them is also what is going to happen to their companies as a result of that environment and from there, what is going to happen to their earnings. They now basically want to find different ways in which to help the companies on the one hand to cope better but on the other

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hand they are facing the high costs of living themselves. And for workers in sectors that have difficulties raising the revenue in the short term, they worry more.

As a country, we have to manage this carefully. People have to cope with the inflation and businesses also have to cope with the inflation. I think Members here who know the business sector better have already spoken from that perspective. In doing so, we do have to be careful to avoid creating a cost-price spiral. And I think the Finance Minister has mentioned this. It is important because if you overdo this and it creates a spiral, in the end the economy will suffer - jobs will be lost. But, at the same time, there is that impact. It is real, and so we have to see. The impact of inflation on different industries is also uneven. And I believe that in this period, going forward this year, we should carefully observe and obtain the feedback, a little more detailed down the industry level, and detect the early signs of stress.

I am not recommending any specific thing that ought to be done now but I think this is the time for that vigilance because we need that advance warning in order for us to figure out what is it that we need to do. The various help measures and dividends that this Budget has granted to Singaporeans will indeed help to take some of that pressure off. But monitor the situation we must. And we should also continue to push for efficiency in the economy. On the Government's part, I believe that we should continue to signal to Singaporeans in terms of how resolute and how vigilant we are in wanting to tackle, together with the people and businesses, this challenge of inflation for the rest of this year, and going forward.

Mr Speaker, Sir, I would like to make some comments in Mandarin.

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( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Now the main problem is inflation. Why is that so? Because it affects everybody's pocket. Everybody thinks that the value of their current salary or money for buying things at the market is now lesser than before or seems to be lesser. The value is, in fact, lower than before. Therefore, that is a practical problem, and our workers may already feel the pinch, even more after reading the media reports about various rising costs. To the workers, they feel that inflation has hurt their pockets. But, will it further affect the company's business, operating costs and competitiveness, and, if so, will it eventually affect their income or even their job security? This is something that the workers are concerned about.

They do understand that, when the Government increased GST last year, the revenue collected was given back to the people as offsets, and they will also be getting something from this year’s Budget. Of course they are very happy about it. But in the long run, they are worried about the impact of inflation.

A friend told me, just like what Mr Seng Han Thong said earlier, he has described the Budget as an ang pow Budget, just like distributing ang pow , not distributing bread. But one of my friends said that this year’s Budget is like a painkiller. Because of the pressure of inflation, it is giving him a headache, so he is given a painkiller to stop the headache, but that is only a temporary relief, to suppress his pain. And after the medicinal effect has worn off, the headache will come back. But I explained to him that it is not so.

I feel that this year's package, the distribution of the dividends or bonuses is not a painkiller, but a timely help, like sending someone charcoal in a snowy

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weather. Not only that, the Finance Minister gave us five ways to deal with inflation and to help people stretch their dollars. These measures are very important, especially the fifth measure, ie, how to maintain our competitiveness by providing or improving training to help people earn higher salary. If we can achieve that, our future would be much more secure. Therefore, we must look at the Budget package as a whole, and not to see it as just a painkiller to treat our headache when we have it, or to treat other symptoms when that occur. So our future path is not easy, but if the Government and the people are united, I am confident that we can overcome these challenges.

*Cols. 711-712.

( In English ): The second P that I want to refer to is Prospects. And here I strongly support the investments in education, in worker upgrading, and in health. These are investments in our fundamentals. And because they are investments in our fundamentals, they will help Singaporeans - all of us - get and keep jobs, and earn more. They help Singaporeans move more easily between jobs in a constantly restructuring economy and not drop out.

The telephone company, Nokia, wanted to shut its factory in Germany and made that announcement a few months back. And we read in the newspapers that the Germans were understandably upset. So they had some protests and they thrashed the Nokia phones. But what good does that do? It lets off some steam but, in terms of trying to retain the jobs or to get new investments and better jobs in, that method does not work - thrashing the phones. The only way to get and keep jobs and to actually be able to replace lost jobs with better jobs is to be able to outdo your competitor in terms of the value proposition - to be more innovative, to be more cost effective. And this is the very reason why we must keep upgrading our workers.

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Our economy now is strong. Last year, unemployment rate was at a record low, and job creation was at a record high. Businesses are short of workers. And so many are crying out for more imported manpower. We understand it but at the same time it is also true that we can train and attract many Singaporeans to these jobs too. So we need to put together arrangements that can make and match workers and business needs all through the longer working years. And here I use the word "longer" in order to remind ourselves that it is not only talking about the 20-year-old worker, the 30-year-old worker, or the 40-year-old worker. We must work for as long as we can, partly out of need, partly out of fulfilment. And in the process of doing that, we need that machinery to assist in that transfer and the transition. It does not happen by chance and it does not happen naturally. And the more we can do this, the more we can make this arrangement and make it well oiled and run well, the more win-win it can be for all parties.

This is exactly why the CET arrangement - the CET master plan that has recently been announced - is wonderful. And I believe that it is a much more flexible arrangement now than before. The fact is that it is aiming for a four-fold increase in terms of the number of workers who will benefit. Again, it is very good. And they must not only train the workers in terms of the technical skills and the requirements for industry. We found that this kind of arrangement should also focus on how do you equip these trainees with the confidence and the belief in themselves, especially those who are the lower income, so that they would be able to make those switches.

If there is anything that we have learned trying to job-place, and if there is anything that we have learned trying to train and place workers over the last many years now, it is this: that technical

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training through the courses is necessary but it is not sufficient. Getting that belief in oneself, getting that spirit up to say that I can move on, I can adapt, and that there is success in a different way perhaps down this other road, are extremely important. And there are now more and more effective ways to do so. Partnering the improvement in the skill training and the courses delivered via a platform that can make and match, that is the way forward.

And this is exactly why the NTUC and our tripartite partners set up what we call the E2i, which is the Employment and Employability Institute, that was launched very recently by the Prime Minister. And the E2i will tap and use the many schemes and resources that we now have, eg, the ADVANTAGE! Scheme and the Job Recreation Programme, exactly to help workers and businesses achieve this.

I watched the opening video on that launch day and I want to say that there was one man in there who was being trained or retrained to go into the cleaning industry. If I remember correctly, he is Mr Bali. He said many things, but one of the things that he said and I remember it very well is this: having benefited from it, he is now going to tell his friends and say this to them, "Don't be scared, last time I also cannot, but now I'm more confident." I cannot deliver it the way he did. But if you look at that man, you know that we are on to something. And there are many more Mr Bali's out there who, if we can reach them, will benefit, and these are the fellow Singaporeans that we can and must help and they in turn can help many others.

The Minister of State for Health (Mr Heng Chee How): 4.31 pm

But in doing this, there is much leg work to bring about results. Money is

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necessary but it is not sufficient. Policy support is necessary, but it too is not sufficient. It takes stamina. It takes perseverance to slog and make it happen. But it is worth it. And I would urge the Government to strongly support such efforts as we go forward.

As Mayor Zainudin mentioned just now, whether it is training or retraining, or any of the other schemes, people only benefit when they can get in there - CPF LIFE, if you do not have a CPF account, you are out of it; if you are a contract worker, if you are not on CPF, you are out of it, and so on. So one of the things that we have to do is to continue to look at where the gaps are, not only how we can finance our policies but how do we get people on to those policies so that they can benefit. And I think this is another area that we must devote time and resources. The more we succeed there, the less of a tail of a problem we will have in the future.

I also think that the new SDF levy formula is fair and helpful to SMEs and employers of low-wage workers because, on average, they will enjoy a reduced levy burden under the new formula. SMEs and employers of low-wage workers can continue to tap the SDF funds as before. And because SMEs, as a group, employ the majority of workers in the workforce and among them, I believe, a significant number of older and lower wage workers, it is all the more crucial that they train and upgrade these workers for the sake of their workers as well as for the sake of the companies. And I truly urge all companies, and especially our SMEs, to respond to this improved arrangement and actively send their workers for training and upgrading.

The third and final "P" is People. Targeting various kinds of help at the needy are good ways of materially

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improving the financial outcomes of the poor. Miss Penny Low mentioned just now about the Gini coefficient. In different ways, we are trying to use WIS, direct transfers, financial assistance schemes, and so on, to help. We know that at the very bottom, there must be something that we can do in order to help. And this will improve the feeling of the inclusiveness. And, of course, sharing surpluses more widely will strengthen the citizenry's identification with our national economic performance. These measures are in the right spirit and they are in the right direction. But for total resilience, they form only part of the solution.

If you look at the Singapore society, we can all agree that this society has become more diverse. For example, in ages, incomes, the number of races that we have on this island, the number of religions that people practise and the number of interests that they have, even the nationalities that are in Singapore at this very moment because we are so open. In this diversity, it presents new challenges to us. So even if you take age, for example, we say and we repeat to ourselves that Singapore has an ageing population and we have to cater to this. This is absolutely correct. But at the same time, we also know that a new generation of Singaporeans have also come of age. So, their aspirations, needs and views are also important, and how do we actually reach out to and engage them.

This increasing diversity as well as the pace of life both work together to pose tougher challenges for social cohesion. Getting people to mix well and to feel together will not get easier. Here, we must not become a country where individuals and households become disengaged from the community, and where groups, if they form, are overly inward-looking. Because if that happens, then the social glue will thin out, and we will find it more difficult to reach, help or rally the help of Singaporeans and

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residents. And without a strong sense of community, of course it will be easier to splinter and harder to recover. So what is at stake is, indeed, resilience.

Against this backdrop, I believe that the local level will become more and more important for the task of reaching out, engaging, discovering, finding out and meeting needs. And to meet needs, I believe that forming partnerships and fostering social networks will become increasingly important. If you look today, there are players on the ground doing this, whether it be the grassroots organisations, VWOs, and so on. There are players doing it. But we can achieve a new level of effectiveness through a concept of greater partnership and networking. Being able to be organised and able to plan, implement and coordinate these efforts well, I believe, will make a big difference to the outcomes for building a community. And this is an area that I hope Government will continue to invest in building capability.

Sir, on this note, I support the Budget.

4.38 pm

Ms Eunice Elizabeth Olsen (Nominated Member): Mdm Deputy Speaker, thank you for allowing me to participate in this debate.

I am happy to say that I will not subject the House to the sniffles and sore throat that usually accompany my Budget speech. This year, I am only hung over. I must confess - I am drunk with joy from Singapore's successful bid for the inaugural Youth Olympic Games. I am glad I went to the Padang last week, and I wish the organising committee with the very best in making history in style - for Singapore and the rest of the world in 2010.

I am also pleased about how the Budget has included several significant

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firsts, particularly in education. Each year, many of the Budget announcements tend to have a familiar ring, a similar look, perhaps, different tags. For instance, this year, cue Growth Dividends in place of surplus sharing predecessors, such as the Progress Package of 2006, both a result of a good showing by Singapore's economy. No doubt, with cost of living spiralling, there were expectations the Government would help the people in this year's Budget.

While the Government has responded in this regard, it is in education and the incentives in this area that truly catch the eye. Some of the firsts to be applauded: Those in the middle income group, that is, those with per capita monthly household income of $1,700 can get help from the MOE Bursary Scheme. The scheme will also now be available to polytechnic students who come from the bottom 50% of households. The MOE and CDC bursaries are extended to students in MOE-funded diploma programmes at La-Salle and the Nanyang Academy of Fine Arts. Most important of all, in my opinion, there will be State relief for part-time and adult students who have not previously benefited from a Government subsidised university education.

These initiatives are in keeping with the importance Singapore has always placed on education, in anticipation of the rising costs of education and an acknowledgement that more must be done to level the playing field. At a time when globalisation is exacerbating the income gap, non-graduate workers especially, are most in need of Government subvention. In Singapore's case, the education gap is felt even more keenly because our economy has developed and restructured so rapidly in our short history. With the 40% subsidy for this group of learners, we can truly believe that lifelong learning is, indeed, a national priority.

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Meanwhile, the inclusion of the arts institutions, to me, is a very positive development, one that indicates that there is a place for diversity in Singapore: diversity of passions, diversity of avenues of success. The funding extension is a much-needed boost for the arts community and goes some way to underline the importance of the arts in Singapore. I hope that funding for arts education will continue to grow - here, I would like say hooray for the Arts School - and this Budget initiative would be more effective and have more of an impact if it is a springboard for new or enhanced schemes to assist Singaporeans who can make it on the world stage. The Government could give this group of Singaporeans a leg up by helping to fund their participation in international events, so as to propel the Singapore arts scene to an international level.

As for the latest bursaries, it is significant that the middle-income group up to the 50th percentile will get more under the MOE scheme, which will also be extended to those in this group who are going to the polytechnics. With the proposed means-testing in public hospitals, tentatively allocating full subsidy to the bottom 50% of wage earners, there seems to be an acknowledgement that this group will need help to cope with the harsh realities of global cost pressures currently as well as moving forward. I would like to ask the Finance Minister if the median wage would increasingly become a reference point to decide on the allocation of State support.

Mdm Deputy Speaker, rising inflation at a 25-year high is the hot topic of recent months. And I appreciate that the Government is, among others, allowing the Singapore dollar to appreciate modestly and is stepping up the diversification of food sources to help mitigate inflation. I am also glad the

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Finance Minister did not preach to Singaporeans to buy non-branded, house brands so as to cope with inflation. The supermarkets already saw a spike in the sale of house-brand products - 18% last year at Giant Hypermarket, according to a Today report on 5th February, between 10% and 20% at Cold Storage and Shop N Save, and "double-digit growth" at NTUC FairPrice. So, this is a strategy already being employed by those in need; it is not a solution. Earlier this month, I joined my committee members from the Kebun Baru Youth Executive Committee to check out grocery prices at FairPrice at Ang Mo Kio Hub. We looked for the cheapest brands around and were taken aback by what we thought were high prices. For instance, the cheapest bag of rice that we found for 10 kg of rice was $12.80, although I have since learnt that a 10 kg of rice at Giant costs about $11. A tin of cooking oil was $4.30. And I did not know that a large tin of Milo would cost $11.65 - I guess I am not going to be having a lot of Milo Dinosaur from now on! In all seriousness, these prices might be affordable for one segment of the population, like everyone in this House, but another might baulk at the cost.

Many Singaporeans would have calculated by now how much they are getting in the Budget handouts. Some of them are also wondering why the Government had to raise the GST last year after the Finance Minister, 10 days ago, announced a $6.4 billion surplus. While the economy grew more than expected, 7.7% compared to the initial forecast of between 4.5% and 6.5% - that alone was not the reason for the complete turnaround from the deficit of $0.7 billion originally projected. The property market which had been on the uptick, was "exceptionally buoyant". Out of the ordinary it may have been, but the question remains, and I would like to ask the Finance Minister why the Government did not anticipate revenue figures more accurately, especially when it is in control

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of various factors, such as immigration numbers.

One of the KPIs of the Ministry of Finance is Budget Marksmanship. The projected figure for Government Operating Revenue as a percentage of budgeted revenue, excluding Net Investment Income contribution for FY2007, was between 97% and 103%, the figure has most recently been revised to 119.1%. For FY2006, when the economy surged 7.9% from the initial forecast of between 4% and 6%, the actual operating revenue was 108.1% of the budgeted revenue. So, Budget Marksmanship has declined. Of course, Singapore is not alone in this regard. Hong Kong is expected to report on Wednesday a surplus of four times the amount it forecast in its Budget last year, or HK$100 billion, which is S$18 billion. So, 2007 was a special year. But the takeaway for some people, judging by reactions online, is that Hong Kong managed to rake in a record surplus even though it was forced to scrap a proposed sales tax after public objections. Was the Singapore Government too hasty in raising GST, a regressive tax, at a time when the income gap was the hot topic? Now, inflation is the topic du jour . There are worrying voices on the ground that say it would be hard to believe the Government the next time it says more revenue is needed for spending. Such ground sentiments are often accompanied by references to the billions of dollars that the Government

of Singapore Investment Corporation and Temasek Holdings are spending to buy stakes in foreign banks. To the average Singaporean, it is unfathomable that GIC and Temasek could shell out some $30-odd billion and, just a year ago, the Government said it needed more money for social spending.

Perhaps, the Minister for Finance could clarify this matter to address these concerns. One question that I have is on the Medisave top-ups, a regular feature of the Budget each year. Will this year's top-

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ups of between $150 and $450 be able to match rising healthcare inflation - 6.2% as of last year?

Mdm Deputy Speaker, the Budget has clearly spelt out the extensive fiscal measures for Singapore to be a "top quality economy", and I commend the Minister for Finance for the measures to help SMEs in particular, seeing as the latter are only becoming more important for the Singapore economy. I am also taken with the notion of building a "resilient community". But, in this regard, I think we can do more.

The key to resilience, I believe, is in having a strong identity as a nation of Singaporeans. There is no alternative, no stronger glue, none that money or a sterling economy can buy because, strip away the growth and the good life, in times of crisis, a sense of belonging and the bonds between people will be what keeps the country from fraying.

How can the Budget Statement, a reckoning of the Government's revenue and expenditure, chock-a-block with numbers, help to achieve this intangible? In simple ways, perhaps. How about bond-free Singapore scholarships, awarded by the State, for our youths to pursue their university studies anywhere they wish to, and in any field they choose? Interest, aptitude and household income can be the criteria. As it is, the Budget already recognises the importance of providing opportunities "to develop every skill and talent and where every one does his utmost to do better and surprise with his abilities".

The new education incentives reflect this. But can we do more? Top universities around the world, and now our local universities increasingly, judging by a Today report this weekend, are offering bond-free scholarships. One consequence is stronger alumni ties

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arising from a sense of attachment, a natural indebtedness, although nothing is expected from the awardees. Why can the State not do this? We subsidise and educate many foreign students through grants and scholarships in the hope some stay for the long-term and contribute and, hopefully, sink roots here. Not all do, but we persist nonetheless. We should give our youths wings to fly wherever they want and hope that most of them come back because this is the country that helped them fulfill their dreams.

Perhaps, another way to strengthen bonds and belonging, and to build a resilient community is to set up a national fund-raising committee (or NFRC) which can help VWOs which are independent of the Community Chest to do a better job of raising funds. Too much time and efforts, with not so much resources, are spent occasionally by some VWOs to raise funds. An NFRC can help to streamline the fund-raising process, advise and assist on best practices, provide contacts for event companies and other parties needed for a fund-raiser. Our community organisations certainly need as much support and help as possible in order to grow and develop and fully achieve their potential to help Singaporeans.

Mdm Deputy Speaker, the question I ask myself when I think about the Budget is: how can Singapore be a city of promise, not just in terms of economics but socially as well, not just for the young but for the old, too? I saw positive signs in the Budget. For instance, two separate tax relief initiatives, each up to $7,000 for individuals to top-up the CPF accounts of their family members and for employers to top-up their workers' CPF accounts and contribute to their Supplementary Retirement Scheme, which will no longer have an age limit for contributions. These initiatives hold out the promise of a more secure retirement. I would like to ask the

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Minister for Finance whether only immediate family members can claim the tax relief. I would also like to ask the Minister what he thinks of flexible, hybrid retirement schemes set up by companies that work similarly to the CPF scheme, unlike traditional pension schemes, which the Minister said may have high overheads. Would these schemes augment the latest changes?

Ultimately, whatever the idea, the best way to build a resilient economy, a sense of identity and belonging, is to give people ownership of their future and of their country's future. I know a lot of feedback was sought prior to the Budget. Therefore, I would like to ask the Minister for Finance what suggestions from the public - besides, of course, the call to bury the death tax - were directly incorporated into the Budget. The answer could hearten a fair number of people.

I think a perfect way to illustrate the importance of ownership is Singapore's bid for the YOG. One of the criteria for awarding the bid was the level of support amongst the populace. Well, it was amply reported how businesses, students and various organisations went the distance with lion-hearted efforts to back the Lion City's bid. At the announcement last Thursday, every time "Singapore" was mentioned on the live feed, there were loud cheers from the crowd. It was heart-warming to see how much national pride was spilling over. Moments such as this capture the essence of the Singapore identity.

I would like to end off by reading a passage from a book entitled "Beautiful Minds". It is a collection of journals written by the students from Pathlight School, and I really encourage hon. Members to get a copy because it provides for very entertaining as well as fascinating reading, and it will take your mind off the Budget a bit.

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This passage is written by Brian Lyen. He wrote it when he was in Primary 4, ie, in 2004. If my Mathematics serves me well, he is now in Secondary 2. I quote:

"Talent is the natural ability to do something well. There are many kinds of talented people. The most famous may be talents in sports or music. Some may even be prodigies. Very talented autistic persons may also be very severely disabled. They are called savants.

Everyone has a talent. Often, we have to look for it or recognise it. Some may be naturally friendly like Bryan. Ms Loy is patient and kind. My maid is good at gardening. Are these talents less important because less people know about them?"

Well, my answer to Bryan is "No". I believe and I want Bryan to know that every talent is important and every talent will have an opportunity to develop in Singapore, because they can, and they will.

Mdm Deputy Speaker, I support the Budget.

4.53 pm

Ms Cham Hui Fong (Nominated Member): Mdm Deputy Speaker, 2007 was a good year for Singapore. We enjoyed good economic growth and we had a record of 236,000 jobs created. Likewise, for the workers, we had a good year as well. In the unionised sector, we had the lowest retrenchment since 1994. We had the highest bonus since 1990. We also had the highest annual increment since 2000. Not only that, about 80% of our companies actually paid higher wage increases to the low-wage workers in the form of dollar quantum or percentage-plus-dollars. By paying wage increases in this form, it certainly benefits the low-wage workers.

So, what we have noticed is that the flexi-wage system is working. We are

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thankful that our union leaders, together with the workers, have been vigilant in ensuring that we uphold this flexi-wage system so that the wage increase continues to be sustainable and it does not erode away the cost competitiveness.

The Minister for Finance spoke about building a resilient community. In it, of course, he spoke about how we can secure more financial security and retirement savings for old age. One way is certainly to encourage workers to work longer. In the unionised set-up, we have slightly more than 1,000 companies. About 40% have committed to re-employing older workers and we already have close to 4,000 workers currently beyond 62 and are still being re-employed. Over the last two years, because we have started pushing for this re-employment since the beginning of 2006, we have seen this general acceptance. The awareness is there. Of course, the acceptance that they need to restructure and to have new infrastructure to support these re-employed older workers is already there.

I would like to highlight one of the companies. This is not a company that has only recently adopted this re-employment practice. Keppel Shipyard is one of the early adoptors since 2006. They came to us and agreed to commit to re-employing the older workers. So we looked at ways that we can restructure the company. In 2006, we looked at the wage structure. It was a seniority-based wage structure. They paid everybody the same across-the-board. So we knew that this was not something that was sustainable if we were talking about employing the older workers beyond 62. If it was seniority-based, then they would be priced out. So we moved into one that pays according to performance. We have two components. One, "performance increment", pays according to individual performance, and the other one that pays

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on productivity bonus, ie, to encourage teamwork. In 2006 itself, they started this. We had a lot of communication with the people to make them understand the need to move into one that is performance-based. Yes, there were anxieties. But we managed to pull through. Last year, Keppel Shipyard made a record of 8.25 months' productivity bonus that was shared by all, whether young or old. Keppel Shipyard, since embarking on this wage restructuring in 2006, has come up with multi-generational courses to ensure that the young and old work and integrate together and appreciate the values of each other.

And they did not just stop there. Recently, they embarked on a mentoring programme. They came up with a mentoring programme to see how they could equip the workers. It is not just workers hitting 62. They looked at the cohort of the workers who are in the age group of 51 to 60 because they understand that if they want to prepare the workers, they have to prepare them early and not when they are near 60 or at the age of 62. So they looked at this cohort of workers and they picked out those with the potential to take on mentoring skills to take on mentoring roles to mentor the new workers. Their job is basically to orientate the new workers who have just joined the shipyard to familiarise them on board the vessels, to teach them and build interpersonal skills and discipline on the yard as well as safety precautions on board the ship. They looked at the cohort of 51 to 60 and they thought this is the way they want to do it. But they did not just stop at mentoring as well, because they cannot be having all the 300-over workers becoming mentors eventually. In the case of Keppel Shipyard, they have about 338 workers who are in the age group of 55 to 61 and about 43 who are currently 62

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and above. They reckoned that it could not be a case where all their workers eventually would become mentors, which was why it actually pushed them to start talking to us. They even set up a dedicated committee to look at new ways to explore and develop the capabilities of the older workers.

We are highlighting this because we have indeed seen more companies embarking not just on one programme but more programmes whereby they can facilitate re-employment. But what we are very happy to see in the case of Keppel Shipyard is that they did not just stop at one. They knew that if you want re-employment to work, they need to really work on many more opportunities and they have to keep on evolving the system so that they can continue to cope with this ageing workforce.

Although we have about 380 companies on board, we need to work on another 600 companies in the unionised sector. What we hope to see are companies looking long-term. They should find ways to develop the capabilities of their older workers. They can do the same job but there could be other ways to tap on their potential. So we hope to work with more companies, together with the tripartite partners, ie, the unions, workers and the employers, to see how we can find new ways to develop this further. We believe that instead of workers just expecting some year-end bonus from the Budget, the most reliable and steady stream of income that they should be looking out for is actually through their employment and re-employment.

Next, let me touch on the training for the low-wage workers. Our Budget last year provided for the fourth pillar, ie, the Workfare Income Supplement. The enhanced WIS can pay up to $1,800 if you are aged 55 to 60, and probably up to $2,400 if you are 60 and above. Of course, we are using probably $1,000 as

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a proxy. Last year, NTUC helped about 6,000 on board the CPF scheme. These are the contract workers and we know that the majority of them generally do not enjoy wage increases at all. So the enhanced WIS certainly comes in at the right time to actually help them cope with the cost of living. When we tried to sell CPF to these workers and talk to them about WIS last year, almost everybody did not understand what we were talking about because they found the scheme complicated. One is 2.5, part of it goes to CPF. They did not understand the scheme. We spoke to them again when we knew that their money had already come in early last month. Finally, they understood what WIS is all about. They knew that this is something where, if you work, you can get the support.

I remember when we talked about WIS last year, our intent was, yes, to bring those who should benefit from CPF to come on board the CPF. But eventually, we should also help them graduate out of WIS because the low-wage workers cannot always be low-wage workers. Some of the contract workers we spoke to are actually quite young, probably in their late 40s, early 50s. They cannot be dependent on WIS for the next 10 to 15 years. In this aspect, since the Government has announced this reduction in Skills Development Levy from 1% to a quarter percent, it will certainly benefit these companies because a large pool of them are the low-wage workers. The Government is also pumping more money under this CET framework. This is an area where we will certainly be working with these employers.

What we have done is that we have already alerted the employers who employ these 6,000 workers. We have their database and we have to work with them to find ways and means to explore new training opportunities to help these workers so that they can get out of this poverty trap and they can actually move on. Our intent must be for them to get out of WIS eventually.

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If I may just touch briefly on the retirement and savings account. We are happy to note that employers will now be allowed to top-up the Special and Retirement Accounts for the workers and they will also enjoy the full tax deduction. In the unionised sector, we have already seen companies whereby they use any unused balance of the outpatient amount which has already been topped up to the worker's Medisave account. We have already done that with a few companies - GSK, Tay Jin, quite a few companies have already done that - to help to build up the employee's Medisave, knowing that healthcare expenses are expected to go up in years to come. Of course, we have a separate arrangement for the foreign workers because they do not have a CPF account. So we believe that this is actually a good approach and it is something that, from the union's point of view, we will certainly be talking to the employers to see how, if the companies are doing well, we can help to top-up the workers' Special and Retirement Accounts to help them build up these accounts faster.

To conclude, our people have trusted the Government all these years. We have also seen this generous handout of $1.8 billion worth of benefits to the people. I think we totally agree that we have to build a resilient community, and a community that is not just resilient, but is also strong and close and must come together at all times. So we have to work together to allow more workers, especially the older workers, who are willing and want to work, to continue working. Also, to help those low-wage workers who are eligible to be on WIS to be first on the CPF scheme and WIS, and then gradually up-skill and graduate out of WIS. I believe that we all have to do our part, so let us all do our part and build up a strong, close and resilient community whereby everyone can actually look forward to better years ahead.

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With that, I support the Budget.

5.02 pm

Mdm Cynthia Phua (Aljunied): Mdm Deputy Speaker, the Singapore economy has done incredibly well last year. It shows the wisdom of our Government when we embarked on the economic restructuring exercise. Painful though it may be for many workers, the rewards have clearly silenced the harshest critics.

This year's Budget came with a bagful of goodies. I must say the goodies were like the spray of water on a garden during a hot humid day. The Budget kept almost everyone happily talking. While everyone is in high spirits, I think it is appropriate that I raise this topic today about our civil service.

Certainly in no small measure, our civil service employees - and I hesitate to use the words "public servants" - have a hand in the execution of the policies. They too should be congratulated. But it is timely that as we relish this achievement, we be reminded of where success can lead to. At this point, I would draw on the wisdom from no one less eminent than one of our founding fathers, the late Mr S Rajaratnam who, in 1982, was the Second DPM (Foreign Affairs). In his speech at NTUC, he broached the subject of how the higher a society climbs up the ladder of success and prosperity, the greater is the probability of it coming crushing down. He called this the "iron law of history". And this was what he said, and I quote, "If you ask me about the odds, the probabilities are as high as to vouch on inevitability, and I base this judgment not on my understanding of history." However, as laws of history, like all societies are man-made and he surmised that we can therefore change the laws and survive. He then went on to talk about the X-factor that kicks in when

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society prospers and becomes a destructive force. This force is the individual who no longer sees himself as a member of a community but, added the late Mr Rajaratnam, as one entitled to rights and no obligations.

This then points me to look at our civil service employees, especially those who are holding key positions. I ask that they pause and ask themselves if they are too detached from the realities of the frontline and the ground and see themselves as individuals alluded to elegantly by the late Mr Rajaratnam. I say this because over these few years, together with the change of leadership in Government we have placed emphasis on the renewal of the civil service at the same time. For the older civil servants, many have come from varied and poorer family backgrounds and many have since retired. They had a greater propensity to empathise with the demands and needs of various sectors in our population. Many of our key officers presently are returned scholars. Some come from well-to-do background and many have benefited from a "helicopter" career path. The lack of opportunity to mix and interact with the various sectors of the population is also now a concern of our education system. Recently, the Ministry of Education has called for schools to create opportunities for the children in the gifted stream to mix socially amongst their less intellectual peers. As a parent, I have recently received a letter of invite or permission for my less gifted child for an outing with these gifted schoolmates.

We have read about junior and middle-level Government employees brainstorming on service quality, attending courses to equip them to deal with their customers, the public. In our present world setting, there is increasing public expectation, demanding nothing less than the best from not only the frontline officers, but even the top brass who heads our Government Ministries, quasi

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Government agencies and other boards and enjoy fast track careers. Unlike the services offered by the private sector, where their customers may have a choice of providers, in the Government service, the customers have no alternative. It is a monopoly. There will be, for example, only one NParks, one HDB, one LTA, and so forth. Hence, what happens if the heads of these monopolistic bodies are not singing in harmony with the service quality and service excellence that are being imbued on their frontline officers? Inquiries and correspondences are ignored without even the courtesy of any acknowledgement. I say this from my personal experiences as an MP, having to deal with the senior ranks of the civil service. I believe my experience may also be the experience of some others in the House. One senior Member has advised me to be thick-skinned. My personal experience is that I have not only to be thick-skinned but also to be tenacious with the request that I have made.

Recently, whether fortunately or unfortunately, I had the experience myself. I have been told by a civil servant audaciously that he, a civil servant, will one day, sign off on a set of plans that I had to personally appeal to him in person after many months of submission and delay. Here, I would like to state that it is a community project. Here I was very upset, but the consultant, who was with me, was as cool as a cucumber. He said to me, and I quote, "You are already privileged to be able to have an audience with him. Such remarks from them are so common for consultations like this." If we do not check this attitude of loftiness and superior haughtiness, then there is a high risk of the fate of the iron law of history descending upon us.

Minister George Yeo, in December 1988, at the opening of the MSD Seminar on "Business Management for a Better Public Service" spoke of the three conditions required for a successful civil

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service. It must bring in the best and brightest. There must be not only intellectuals, but also moral leadership and a collective self-consciousness of its role in society and of its corporate mission. He then went on, and I quote, "As a group, civil servants must always be concerned with the national welfare and proud to be charged with the responsibility. A certain idealism keeps up group morale and group confidence. Pride and idealism must of course not degenerate into arrogance. You command respect, you do not demand it."

I raise this subject not to question the integrity of our civil service. I raise this subject not to create a mistrust in our civil service. I raise this subject so that we pay more attention to the individual attributes, perhaps empathy beyond just brains and qualifications that the Budget has no hesitance to provide for the best, and as they succeed in climbing to the top of the administrative ladder, they do not forget the elements of a successful civil service and, more critically, the needs and heart of the ground people - the man-in-the-street, to be heard.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mdm Deputy Speaker, the next concern I have is to appeal for a budget to educate our older women folks in the community - the age group between 50 and 80 years old. They are mainly housewives, the key of the households; many of them not only have brought up their children but also are taking care of their grandchildren. Many of them also do not have much education and are not able to read the newspapers and perhaps maybe able to catch some information from their friends or neighbours. But such information may be half-truths or with added misperceptions and opinions or totally distorted.

Recently, there were many important changes made in the Government

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schemes, such as Workfare, MediShield, the Budget handouts, the CPF LIFE and others that have a direct impact and long-lasting effect on our women folk. However, much of this information has not been properly rolled out and explained to them. Many have not been able to take advantage of the schemes as they are simply not aware of these schemes. Not being aware deprives them of asking or persuading their husbands and children to participate in the schemes and to take care of their welfare in the long term.

Some just look at the contribution to the schemes as additional expenses for the family, their husbands and children. For example, the basic MediShield, it is indeed an immediate expense. However, in the long term it helps the family to cope with unexpected accidents and incidents of illnesses. Many of the women folk I spoke to informed me that their children have their families to take care and they do not want to further burden their children. Presently, they can do without this MediShield as they are healthy. Many look at the short term view and not the long term benefits.

Mdm Deputy Speaker, I am appealing for a coordinated body in an agency such as the PA or MCYS who has direct dealings with groups and communities on the ground, to have a separate budget for outreaching to this group of the community. A concerted effort to outreach to the women folk on the ground is important to bring a lighter load on their shoulders. A study by Mr Colin Mathers, World Health Organisation, has shown that Unipolar depressive disorder heads the top 10 medical conditions contributing to the number of years of life lost in Singapore for our women. For men, it is placed second after Ischemic heart disease. Therefore, in my opinion, I feel that the above is one way to take care of the women folk in the community.

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I will continue my speech in English.

*Cols. 713-714.

( In English ): My third concern is the annual premium for our MediShield which I hope that the Minister for Health could look into.

Before I begin, I would like first to thank the Minister for he has done much to revamp our healthcare system and his willingness to listen to the ground. I know he has conducted many ground dialogues on the proposed hospital means testing.

In my recent effort to reach out to a woman to explain the goodies of the Budget and looking at the pay-out for the top-ups to the CPF Medisave Accounts, and persuading them to attempt to cover themselves under basic MediShield, I had to look at the MediShield's annual premium. The amount ranged from $160 for the age group of 51 to 60 years old, to $510, about three times, for a person below 80 years old. From 80 years old onwards, the amount is $600 and much more every two years. The latest bonus pay-out for this Medisave top-up is $450. It is only sufficient to use this sum for MediShield to cover up to age 76 to 78 years old. I have a suggestion to make after looking at the details of the CPF LIFE and hope both the Ministers for Finance and Health could look into.

Presently, the annual premium for MediShield up to age 50 years old is comfortable for most people with some contribution from their family members or when one is working. The premium gets very high from 76 years old onwards.

My suggestion is that the amount of annual premium be reversed, ie, higher when they are younger and working, and gets smaller when they are older and without income. I am not suggesting cross-funding by the younger population to the older population. I agree that the cross-subsidy is not workable in the long run. What I have in mind is to set aside a portion of

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the premium of the insured when they are young to an investment fund to generate income to pay for the higher premium when the insured is older - just like the CPF LIFE, where a sum is placed ahead to earn the additional interest premium for a longer and higher payout. This is part of the pre-savings for the people. This would take out the pain for the older population in the continuation of the payment of the premium when they are older, and reduce the temptation of withdrawing from the coverage when they most need it.

With this address, I support the Budget.

5.16 pm

Mr Michael Palmer (Pasir Ris-Punggol): Madam, I rise in support of the Budget Statement.

Singapore did very well last year. That is the message that comes out of this year’s Budget Statement and the figures clearly support it. Our real growth rate was far higher than the initial estimate of 4.5% to 6.5%. Instead of a budget deficit of $0.7 billion, we ended the year with a budget surplus of $6.4 billion - an impressive turnaround. Even if we discount the higher-than-expected revenue from stamp duty due to the sizzling property market last year, the remaining $4 billion plus in surplus is impressive by any standards.

What challenges will 2008 bring for Singaporeans? Everyone knows that costs are rising. In view of the signs pointing towards this trend of continuing and, very possibly, accelerating, can we give more back to those who need it?

I am mindful that it is not desirable to create an expectation of every budget being a “ Hong Bao” . However, I am of the view that, given the surplus that we have generated, and the fact that inflation is a

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serious issue that will continue to affect every Singaporean, we should consider doing more to help the less well-off if things get worse during the course of the year.

Mdm Deputy Speaker, there are two issues which I will cover in my speech.

The first is inflation, and whether we can do more to help Singaporeans cope.

The second concerns the rising rental costs facing businesses. Again, the question is, whether we can do more to help businesses.

Inflation

In 2007, overall inflation was 2.1%. If we look at inflation over the last five years, last year was the highest in a long time. In 2003, inflation was 0.5%; in 2004, 1.7%; in 2005, it went back down to 0.5%; and in 2006, 1%.

The estimates for this year do not look any better. We expect inflation to rise between 4.5% and 5%. That represents at least a 900% increase from the 2005 figure and a 450% increase from the 2006 figure. If inflation hits 4.5% this year, it will still be more than a 200% increase from last year. So when the Minister said that "inflation today is higher than what we have been used to in Singapore for many years" , in my humble opinion, that may be understating the matter somewhat.

To be fair, the Budget Statement acknowledges that inflation “is a major concern for the Government” and that prices of certain essential items have gone up significantly.

Let me touch on a few more items that affected us in 2007:

In February, KK Hospital increased its ward treatment charge fees.

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In May, public hospitals and polyclinics upped their fees. More significantly, the price of various basic food items went up in markets, supermarkets and hypermarts.

In July, HDB rents hit a 10-year high, oil companies raised pump prices, NETS announced a fee hike, the price of HDB resale flats went up, Starhub increased its cable TV charges, electricity tariffs went up, hospital bills went up 10% to 20% across ward classes, and GST went up by 2%.

August saw ERP rates go up for certain locations; it was announced that car insurance premiums were likely to rise, more ERP gantries were installed and hours extended.

In September, employers were told that they would have to buy medical insurance for foreign workers from January 2008 and electricity tariffs rose again.

In October, the public transport fare increases took effect, petrol and diesel pump prices rose again, the price of flour went up 30% and therefore so did noodles and bread. Rent also continued to rise.

In November, petrol and diesel pump prices rose again and rents across all sectors continued to increase.

In December, the price of luncheon meat went up from $1 to $3, taxi fares went up, school bus fares went up and even the Opposition’s Potong Pasir town council added to the list with an increase in its S&C charges.

The effects of these and other prices increases are being severely felt on the ground. They all have either a direct or indirect effect on the cost of living. The Minister has outlined a 5-plank strategy to

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combat inflation. I support the strategy. I am convinced that we are doing the right thing in not going down the road of fixing the prices of certain essential goods, which could create an artificial economy.

I would like to focus on the fourth plank outlined by the Minister - direct assistance. This is the most immediate and direct way to help cushion the adverse effects of the rising cost of living. Can we afford to give Singaporeans a little more? With the surplus we have, the answer must be “yes”. Should we consider giving more as and when necessary? In my view, the answer should also be “yes”.

The Budget Statement sets out several measures to provide direct assistance to help those who are having difficulty coping with inflation. Included in this bundle of assistance are some of the packages that were already given out last year, such as the GST Offset Package and the Workfare Improvement Scheme (WIS).

I note, however, that at the time these packages were announced, they were not specifically for the purpose of helping people cope with inflation. The GST Offset Package was given to help Singaporeans cope with the 2% increase in GST. The WIS was aimed at helping those affected by the widening income gap. It was meant to help low-income workers level up, and not to cope with the recent sharp increases in living costs. A large part of WIS is also paid into the CPF and is rightly meant as savings for retirement, so that does not help with what is happening today.

The other more specific assistance measures, such as the Post-Secondary Education Account, the 20% income tax rebate, the $40 increase in the Public Assistance Scheme, the ComCare Fund top-up and the Medisave top-ups are to be commended but are very specific and limited in effect. Not everyone in the lower and middle-income group benefits

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from all these measures; only some do, and then they only benefit from some of these measures.

So which measure is of immediate benefit to the average Singaporean who is feeling the sting of price hikes? The surplus-sharing Growth Dividends. The majority of Singaporeans will receive outright payments of between $300 and $400. This will cost the Government about $865 million. But bearing in mind that we had a $6.4 billion surplus, I believe we can do more.

We need to keep a close watch on the situation on the ground. We should earmark and set aside enough for a contingency fund to provide inflation relief packages, similar to the GST Offset Package, as and when required. They should be specifically targeted at the low- and middle-income earners, with the most needy receiving the most help.

The speed at which costs have risen in the past year alone has left many trying to catch their breath. Having a designated inflation relief fund will enable the Government to act nimbly, for assistance needs to be timely, given the fast-changing trends in the cost of living. We should not shy away from helping those in need when we have the resources to do so because we are afraid that we will create an expectation of handouts. If explained correctly and given in a targeted and timely manner, the Government will not only be seen as one which is brave enough to impose charges and raise taxes in the face of criticism when it deems such action to be necessary, it will also be seen as one that is caring, that knows the ground and is willing to act swiftly when help is needed.

Rental cost for businesses

I now turn to my second point, which concerns the rising cost of doing business - specifically, rental costs in Singapore.

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In the Budget Statement, the Minister said that the Budget for 2008 was centred on four key thrusts. Two of these have to do with spurring growth of innovative enterprises and adjusting our tax policies so as to stay competitive. Unfortunately, I did not see anything in these measures which will help address one of the main heads of cost for most businesses and therefore one of the main problems faced by businesses at this time - the cost of rent.

Over the last two years, both commercial and residential rates of rent have been on the rise, with especially sharp hikes in 2007. We generally like to see Singapore moving up in international rankings, but not when it comes to reports showing Singapore among the cities with the most costly office space in the world!

The Department of Statistics provide these figures:

From end-2006 to end-2007, rent for office space went up an astounding 56.1%. In Raffles Place, office space rental has reached a high of close to $20 per square foot.

From end-2006 to end-2007, rent for private residential property increased by 41.2%. This is significant for foreign businesses in Singapore that have to house their foreign employees or local businesses that want to attract foreign talent.

Rental increases for shop spaces were a bit more moderate: from end-2006 to end-2007, shop space rental increased 18.2%.

According to the Ministry of National Development, this office space crunch and resulting rental spike should not be a long-term problem. More office space will

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be on-stream by 2011, which should ease the sharp rise in office rent. In the interim, plots of land and old buildings that can be converted to office space have been tendered out to ease the space shortage. But looking at the figures, these measures have not had the desired effect.

I believe that it will be a great help to a great many businesses in Singapore if some tax relief could be given to firms and businesses for the rent that they pay. This would go some way towards easing the burden of the rising cost of doing business in Singapore. Such relief need not be a permanent one, and can be reviewed annually. If, indeed, rental costs soften by 2011, such tax relief would be needed only for the short term, but would give a much-needed boost to businesses at a time when they need to stay competitive.

In the implementation of any such tax relief, the Government could consider giving different rates of tax relief depending on the type of industry and the location of the premises rented. For example, greater tax relief could be given to businesses that are willing to move non-core departments outside the business district. The relief need not be for the whole amount of rent paid - it could be capped.

Whatever the case, whatever the formula, if we want to encourage businesses to be innovative and competitive, we need to help them keep their costs down. Rent and salaries are usually the two major cost items in any balance sheet. I urge the Government to consider providing tax relief to firms and companies to help them tide over this period of high rental costs.

Conclusion

We have ended the fiscal year with a very healthy surplus. We are in the

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process of investing huge amounts of money to transform Singapore into a vibrant and trendy city. A total of $50 billion to overhaul and improve our land transport system; $1.8 billion to build a sports hub; close to $100 million for F1. I believe that these and other investments will certainly make Singapore one of the most sought after places to live and work in the world.

But in the face of all this, we are experiencing one of the highest spikes in our cost of living in the last five years. I believe that the Government should not stop at the direct assistance that is currently available. I urge the Government to monitor the situation and provide inflation assistance, if necessary. I also ask that some consideration be given to providing short-term relief to businesses to help them stay competitive in the face of high rents and other rising business costs.

Mdm Deputy Speaker, I thank you.

5.28 pm

Mr Baey Yam Keng (Tanjong Pagar): Mdm Deputy Speaker, the Singapore Government is probably the only one in the world that gives out cash " ang pows" on its Budget Day. The reason is not because Budget Day is always around the Chinese New Year period, but because we have a prudent Government which can generate surpluses and a caring one which wants to share some surplus with its citizens.

This year, it has been a good Budget where most Singaporeans get something. In fact, for the past few years, we have New Singapore Shares, Progress Package, GST Credits, Workfare Income Supplement and the latest Growth Dividends, just to name some.

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I support the consistent principle of targeting more help towards the low income groups and the elderly, who are the most vulnerable in our society. However, most people are confused over the acronyms and what exactly each scheme meant to serve.

There are people who happily take the GST offset package, spend it immediately on something and continue to complain about the 2% increase in the GST. Of course, I am happy if people do not need the Budget ang pows to survive. However, I am worried if people are beginning to take the ang pows for granted. I am worried if people just look at the dollar figure they receive, rejoice when it is more than last year's and lament if it is a smaller windfall.

Are we breeding an unhealthy expectation of Budget ang pows ? How would people react to a Budget without any ang pows ? The Government may want to consider a simple and direct formula. For example, we can model it along the same way as the bonus of the administrative service is structured, as a percentage of GDP growth. We should also retain the priority towards the needy and the elderly who will receive more. Perhaps we can also add the size of the budget surplus as another factor, so that people are able to see the basis of the ang pow and the direct linkage between the state of the economy and what they receive. With such a formula, there could be less complacency, less debate on the quantum of the money given out, less misunderstanding that it is given out at the Government's whim and fancy and, hopefully, a greater sense of ownership in the country's economic well-being.

Another option is to share part of this surplus only before each term of the Government ends, ie, before each General Election. It could also be a good proxy to the report card of the ruling party seeking for another term of office from the electorate. Some people will, of course,

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accuse this as pre-GE sweeteners, but I see this as a reasonable way to end a term of the Government and to share part of the cumulative surpluses before closing the books.

Sometimes we take a good government for granted and give it less credit than it deserves. The work of the government is often underrated. I am not sure if this has to do with the way the Ministries' achievements and performances are tracked and reported.

For example, people would usually look at the work of MICA or National Arts Council as a total Government support for the arts and, unfortunately, the common perception is that the level of Government support is rather limited. Does this really paint the full picture?

There are other Ministries whose main responsibility is not the arts, but they do support and promote the arts in their own way. Just to name a few examples: MCYS, through People's Association, supports many arts events and courses through the grassroots and CCs. Besides the Singapore Arts Festival, there are various CDC arts festivals and the Singapore Youth Festival by MOE. Apart from NAC grants which support artists and arts groups, MCYS supports the PA Talents, and the Music and Drama Company under the SAF has produced many pioneers in the local entertainment industry like Jack Neo, Najib Ali, Glen Goei and T'ang Quartet. The Singapore Youth Orchestra, financed by the MOE, also creates a talent pipeline for the Singapore Symphony Orchestra. MTI, through the STB, provides marketing support for major arts events which bring in tourists. Another big supporter of the arts, the LTA, launched the largest public art programme in 2004. The North East Line Art in Transit programme integrated art by 19 Singaporean artists, like Cultural Medallion winners such as the late Chua

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Ek Kay, Goh Beng Kwan, Tan Swie Hian and Teo Eng Seng, into the architecture and finishing of 16 MRT stations. Therefore, I would not be surprised if the combined amount of money spent by these various Ministries and agencies exceeds the NAC's, and maybe even the MICA's budget.

The Government is doing more work than it may seem to promote the arts. But, of course, I hope more can be done for the arts. I would like the Government to consider re-packaging the way it reports on its expenditure and achievements. It should not matter that credit is shared to the benefit of another Ministry or credit is claimed for areas not necessarily part of a Ministry's desired outcomes. However, for some areas, there appears to be a discrepancy between the resources allocated due to different relativity of respective Ministry's overall budget.

Mdm Deputy Speaker, I would now elaborate this point in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] A nation's heritage can be showcased in different expressions and methods. For example, the Chinese opera embodies the essence of the Chinese culture. But, due to a lack of dialect-speaking environment and funding from the Government, almost all the local Chinese opera troupes are amateurish in nature. Although many people are interested in Chinese opera, nobody has hopes of reviving the heyday. One day, what remains of Chinese opera might just be an exhibit in the museum.

There are many things in our life that can be considered as cultural heritage, even a tree. For instance, the 80-year old Angsana tree at Braddell Road. The tree was growing well until it was found to be in the middle of an expanded road and

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causing obstruction to the project. In 2005, LTA accepted the recommendation of the National Parks Board to construct a detour in order not to chop down the tree, costing LTA about $200,000. However, things took a twist two years later when the authorities decided to chop down the tree due to safety considerations for reckless motorists. Nevertheless, I applaud the authorities’ recognition of the value of an old tree.

Broadly speaking, both Chinese opera and the old tree can be considered part of our cultural heritage. LTA can spend $200,000 to conserve an old tree, which is not a significant expenditure compared to billion-dollar MRT projects. Yet, I believe that the most local Chinese opera troupes have never received equivalent funding from the National Arts Council or the National Heritage Board.

Let’s not even talk about how to bring Chinese opera to greater heights. Between conserving an old tree and preserving our rich cultural arts heritage, I hope the Government can strike a better balance.

( In English ): The Government is made up of many departments to provide different public duties. We are well known for our efficiency and effectiveness. Having worked in the Government myself, I know that we are very good at defining responsibilities and demarcating duties, ensuring that every single area is well taken care of.

Therefore, every situation requiring the attention of public agencies is well thought through, with a specific agency being held accountable for. We now see more and more multi-Ministry committees being set up to address complex issues. While there could well be a networked Government at the policy level, it is typically the execution at various working levels where the public as the end customer will experience the desired

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outcome. If this is not done properly, the consequence can be greater bureaucracy and a situation that every department becomes very territorial and hesitates to take responsibility for grey areas.

Just last month, the papers reported a very rare incident. Two eagles fought in the air and fell onto a balcony in Jalan Kayu one morning. The resident, Mr Chris Lau, called MND and was directed to the Agri-Food and Veterinary Authority (AVA). He was advised to call the National Environment Agency (NEA) which referred him back to AVA as it concerned wildlife. He was told that NEA only collects dead animals. Apparently, the resident could not be sure whether the two motionless birds were alive, dying or already dead. So he called AVA again, which then arranged for the waste collection contractor to clear the birds. The worker turned up but took off after seeing the birds. The resident decided to call the Singapore Zoological Gardens, but the zoo said they do not deal with birds, and referred him to call the Jurong Bird Park. A bird handler arrived but, after reviewing the situation, he said he needed AVA's approval to deal with the birds. So it was back to the first agency that Mr Lau called. Finally, the two birds were collected at about 6 pm, eight hours after the eagles first landed.

While this may be something that will only happen once in a blue moon, however, it took many phone calls and hours of anxiety before the birds were removed. Imagine two huge birds of prey, standing at least one foot tall with razor-sharp beaks and claws, in your own balcony. Could there be any danger of the birds diverting their personal dispute to the residents or what if they had carried the bird flu virus? Well, that might bring in another Ministry, MOH, and I am not sure whether there would be a quicker resolution or a longer merry-go-round.

As it ended up, one eagle was dead and the other was still alive. To give it the

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benefit of the doubt, I suppose the agency had wanted to provide a complete solution and did not want a situation where NEA just collects the carcass and AVA takes care of the injured bird. Perhaps with a Group CEO now at Wildlife Reserves Singapore, arrangements between the Zoo and Bird Park would be more seamless now. To be fair too, not all fingers in this pie were all Government bodies. But many people do have the experience of calling a Government body and gets sent around in a merry-go-round, sometimes even within the same organisation. In trying to make sure that no child becomes nobody's child, the situation has become overly stringent - the father is now insisting that the child must go for DNA testing before accepting his responsibility as a parent.

I think we need to get various Ministries and agencies to work quickly and efficiently together, especially on matters where the boundaries are not too clear. We have heard a very sound Budget to provide resources for key focus areas which will help Singapore create and open new doors of opportunity. Equally, if not more important, is in using these resources to deliver public services. The "No Wrong Door" policy needs to be better manifested, I think, both in practice as well as in spirit.

Perhaps our Government should allow and encourage greater autonomy and empowerment such as the system practised at the Ritz Carlton Hotel. Employees there are given a certain budget and operational leeway in the interest of customer satisfaction, speed and efficiency. They only need to report and justify later. But this requires a certain level of trust in the staff's ability to assess and judge a situation and their integrity.

I like Minister Teo Chee Hean's idea of "Many Agencies, One Government" in his speech at the PS21 Star Service Award

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Ceremony last year. May I be bold to suggest an add-on: Many Agencies, One Government, Total Service.

With this, I support the Budget.

*Cols. 715-716.

5.43 pm

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman): Mdm Deputy Speaker, I rise in support of the motion standing in the name of the Minister for Finance. Madam, this year's Budget has been described as generous and pro-Singaporeans. Singaporeans from different walks of life focus on different aspects of the Budget that concern them most. Of course, the perennial feedback is whether the Government can do more - give more but do not take back more. This year's Budget comes in the wake of higher rates of inflation as Singaporeans begin to feel the pain of higher cost of living. PM Lee himself has acknowledged that the cost of living issue is a real concern facing Singaporeans and we need to help Singaporeans manage the issue.

Madam, it is understandable that the majority of Singaporeans ask if the Government can do more at every Budget. I think, this year, the Government has indeed given more. From CPF top-ups for seniors, to continued investments in our young through the topping up of post secondary education accounts, to ensuring the development of our industries through encouraging innovations, to encouraging familial support through tax rebates for CPF top-ups for family members. The Budget is comprehensive, forward-looking yet introspective.

Madam, I am heartened that the Minister for Finance has chosen the theme "Creating a Top Quality Economy, Building a Resilient Community" in his

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Budget Statement. I would like to focus my speech on the latter part of the theme - building a resilient community.

Madam, while the theme has significant promise, I find that the Budget is too focused on the individuals, with the hope that these individuals will contribute to a resilient community.

Madam, in building a resilient community, apart from the individuals, there are two pillars that we need to strengthen - the family and the community. The focus on skills upgrading and lifelong learning, investing in our young through education, ensuring that Singaporeans have enough savings for a steady stream of income after retirement - are all laudable strategies aimed at strengthening the capacity of individual Singaporeans. However, I think we cannot ignore the trends that are affecting our two other pillars.

Madam, we continue to hold on to the value that the family is the building block of our society and that it should be our first line of defence. While we continue to hear reports from MCYS that the family remains strong, we are also aware that there are social trends that point to the family being challenged.

Divorce and single parent families

One trend that worries me personally is the increasing divorce rates here. Statistics show that the number of divorces under the Women's Charter increased by over 40% between 1996 and 2006. For the Muslim divorces, the number of divorces increased by almost 80% within the same timeframe. This increase is also reflected in the crude rate of divorce which increased from 1.53 per 1,000 resident population in 2001 to 1.96 per 1,000 resident population in 2006.

Madam, people do not get married to divorce. Often times, divorce comes as a last resort. However, often times also, the

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after taste of divorce is bitter and unpleasant. This is compounded when the divorce involves children whose emotional and psychological well-being is often affected. While some related data on divorces under the Women's Charter is not readily available, data on the Muslim divorces showed that 67% of Muslim divorces in 2006 alone involved more than 2,400 children less than 18 years old. Of this, half of the children come from families who have been married for less than 10 years, suggesting that these are very young children to be raised in single parent families.

Mdm Deputy Speaker, the issue of single parent families becomes more complex when we add another dimension - their earlier marital status of the couple involved. Statistics show that one-third of Muslim marriages in 2006 involved couples with one partner who have been formerly divorced. At the same time, the Muslim divorce statistics showed that more than a quarter (27%) of divorces in 2006 involved couples with one partner who have been formerly divorced. Practising social workers will tell us that these are families who are very vulnerable. These serial marriages and serial divorce cases pose a significant challenge to us. We call them reconstituted families - typically consisting of his children, her children, and their children together. Can we imagine the scenario if this family ends up in divorce and remarriage again?

Madam, Members of the House will also be all too familiar with cases of divorced and divorcing couples who come to see them to request for housing - often times, the woman who has custody of her children - and the request is often for a subsidised rental flat as she does not have the financial means to purchase another flat. For every marriage that breaks up, we inevitably have to provide two separate homes, especially if the couple splits custody of the children.

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Madam, housing is only the tip of the problem that we have to address, post divorce. I think we have to address a more fundamental question of how we can make our families stronger and more resilient, to overcome challenges and not resort to divorce far too early.

Madam, as a single parent, often times the woman, who does not have good income after the divorce, will struggle to raise her children. This will be made worse if her ex-husband fails to keep up with his maintenance payments. Low-income women are even more disadvantaged as they often find practical difficulties to pursue maintenance payments from their ex-husbands in the Family Court. Thus, it is not unthinkable for her to decide to remarry for economic dependency reasons. While this may be a valid reason, the repercussion down the road, if the marriage does not work out, is a serious one, made even more complex if she bears him children from this marriage.

Madam, the Budget sets out to improve on the capabilities of individuals to build a resilient community. As mentioned, it is forward looking and looks at the future scenario and responds to it today. I urge the Minister for Finance to look at the family and its challenges as we look forward. This phenomenon of single parent families as a result of divorce, serial marriages and serial divorces will confront us in the future if we do not put in place measures today. Can we consider a radical approach of providing more support for single parent families? At least, they do not need to decide to marry for economic dependency. I know we should not go down the slippery slope of allowing divorce as a simple option or solution. I am not suggesting that we implement programmes like the Aid to Families with Dependent Children (AFDC), like the one in the US which, I know, has led to moral hazards. I think we should adopt a two-pronged approach: (1) to ensure that the

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men are taken to task in performing their responsibilities as fathers. We should put in place systems that will reduce breaches of maintenance orders. Can the tax system be tuned further to facilitate this, either through incentives or disincentives? (2) to ensure that these women be provided with support services like childcare, skills upgrading, etc, to enable them to be financially independent. Just as we give more Growth Dividends to the elderly, can we recognise the struggles of single parent families or households in raising their children and give them more? Yes, we have in this year's Budget, for example, showed how we will continue to invest in their children through education. Madam, a good home environment will certainly provide added impetus for a better outcome. What these single parent families need is support and hope that they can succeed. Of course, we should not negate the role of the extended family and the community in this regard. Single parent family is a family structure that should not be encouraged, but it should not be frowned upon either.

Caring for the elderly

Mdm Deputy Speaker, we have also been addressing the issue of an ageing population actively in the past couple of years and will continue to do so. This year's Budget is a milestone as we introduce the CPF LIFE scheme to ensure financial adequacy post retirement for our citizens. This is indeed a laudable effort but we also recognise that there are different groups of elderly with different levels of financial adequacy even after the introduction of CPF LIFE. We have placed the caveat that this is only one source of the retirement funds. We continue to encourage the children to care and provide for their elderly parents in old age.

Madam, while I do not have the figures to reflect the seriousness of the

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situation, I am sure many Members of the House are beginning to see the trend of elderly folks coming to see us requesting for subsidised rental flats from HDB, as they can no longer live with their children. Of course, the problem is that they are subjected to HDB's current regulations that try to manage the demand for subsidised rental flats, eg, placing restrictions on former flat owners who have consumed various Government subsidies previously. These elderly come pouring their hearts out, crying and hoping that we will understand their plight and respond to their requests. The saddest part is that the subsidies consumed by these elderly have already been shared with their children, yet now they become victims of their own circumstance.

Mdm Deputy Speaker, a typical case is one in which we see an elderly couple, having purchased a subsidised flat from HDB, sold the flat and made substantial proceeds, including cash, from the sale of that flat. They move into their children's home and spend a large portion of the cash proceeds on the renovation of the children's flat. When relations with their children or children-in-law turn sour, they come to HDB appealing to be given a subsidised rental flat. Should the Government come in and provide for them? Or should we insist that these children provide for them, having benefited from the subsidies of their parents?

Mdm Deputy Speaker, similar to the issue of single parent families earlier, the issue is indeed more than housing. It is about ensuring that our families are resilient enough to withstand the stresses of urban living, together with the challenges of globalisation that will continue to increase in complexity. Indeed, the statistics show that the proportion of elderly not living with children has increased from 26% to 30% between the year 2000 and 2005.

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It is indeed encouraging that the majority of elderly are still living with their children and I am optimistic that they are supporting their elderly parents. But the example I highlighted earlier shows that we cannot assume that all is well. The living arrangement of the elderly per se is not the issue. The issue is whether they receive the necessary financial and social support from their children. We have thus far done so through tax rebates. I am glad that in this Budget, we further incentivise the behaviour through tax rebates for CPF top-ups to elderly parents. This will ensure that the elderly will actually benefit from the income transfer. To further incentivise the behaviour, I would like to suggest that while we give Growth Dividends to individuals, for future Budgets, we also give Growth Dividends directly to households who actually show that they are supporting these elderly, eg, those who actually top up the CPF of their elderly parents.

Madam, the challenges facing an ageing population is a serious one and it cannot be the responsibility of the Government alone. While the CPF LIFE scheme is a new financial life line for the next generation of elder citizens, we must continue to start securing the familial lifeline from now to ensure that our families remain resilient and strong to support the elderly members. As we provide opportunities for parents to learn to raise children in today's context, I think we should also start creating opportunities for children to learn how to care for their elderly parents. The need will be even more critical as more are growing older and, along with it, more complex challenges that the children will have to face and manage. Conditions like dementia, Parkinson's disease, along with other physical needs experienced by the elderly, are often too alien to the younger generation today.

Mdm Deputy Speaker, as we strengthen the family to ensure that it

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remains as a building block, we need to also strengthen the other pillar of our society - our community. While we have the social infrastructure in place in the form of social services and the network of grassroots organisations under the umbrella of PA, we are beginning to see more being asked of our voluntary sector. We have established the ComCare system which enables help to be extended through the network of community volunteers who knows the need of their fellow residents better.

However, I think the work required of such volunteers is never easy. We continue to face the challenge of attracting new and younger volunteers to be part of the community network. A strong and resilient community is one that will help our people weather difficult times. It is a community that is mutually supportive, where individual members feel belonged and connected to each other. We need to do more to incentivise voluntarism. I know this may run counter to the notion of voluntarism itself. But we have to be practical and realistic. We can continue to hold on to the ideals of altruism but must also recognise that people are motivated by different factors. In a society where the demands on one's time and energy are so severe, we need to look at what else we can do to promote voluntarism.

Madam, we currently provide tax incentives to promote philanthropy. Can we consider voluntary service in the same light as donations in philanthropy? These volunteers may not have the financial means to donate cash to claim tax incentives, but the amount of energy and time that they are donating to voluntary service is indeed immeasurable. I would urge the Minister to study the feasibility of implementing a tax incentive system to promote greater voluntarism in the community as we continue to build a stronger and resilient community. The

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critics may accuse us of being materialistic but I think we are merely being practical. The tax incentives may just be the initial carrot to start them on the journey to discover the fulfilling world of being part of a community that cares for its members.

Mdm Deputy Speaker, while we continue to build and strengthen our economic competitiveness to ensure our continued growth, we must not lose sight of the need to strengthen our social pillars. The Budget has focused on ensuring Singaporeans are able to fit into the economic infrastructure set up by the Government. However, I believe that individuals' abilities and strengths can be further harnessed with the support from the family and community. To do this, we must conversely strengthen our families and community. These pillars will continue to face challenges but, I believe, with the right measures, we can continue to strengthen them.

Madam, I support the motion.