DENTISTS (AMENDMENT) BILL

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DENTISTS (AMENDMENT) BILL: "to amend the Dentists Act (Chapter 76 of the 2000 Revised Edition) and to make consequential amendments to certain other written laws",

presented by the Minister for Health (Mr Khaw Boon Wan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

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ANNUAL BUDGET STATEMENT: Order read for resumption of Debate on Question (15th February, 2007),

"That Parliament approves the financial policy of the Government for the financial year 1st April, 2007 to 31st March, 2008." - [Second Minister for Finance].

Question again proposed.

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12.36 pm

Mr Inderjit Singh (Ang Mo Kio): Mr Speaker, Sir, in response to the Prime Minister's speech during the debate on the President's Address to this House in November last year, the Second Minister for Finance, Mr Tharman Shanmugaratnam, announced a watershed budget that will position Singapore for the future in the midst of a globalised world to create "a competitive economy and an inclusive society".

Sir, as the Minister mentioned, the Budget positions Singapore for the future by investing in the future, focusing on growing the economy, investing in Singaporeans as well as to help Singaporeans to help themselves. This, I believe, is the key for a bright future for the future of Singapore.

Sir, many good words have been used to describe the Budget - a "wow budget", a "generous budget", a "surprising budget". For me, this is also one of the best - maybe the best - Budgets I have seen since I entered this House in 1997. In one go, we addressed five main areas:

(a) We implemented a social security net, which is a fundamental shift from our earlier operating philosophy - a permanent Workfare which is essentially a wage supplement system;

(b) We increased the GST, coupled with a set of offset measures that will help most lower income Singaporeans and also older Singaporeans, and, of course, now we have also opened the gates for future GST increases;

(c) We lowered the income tax rates, leaving the gates open for future rate reductions to compete as the world changes around us;

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(d) We restored the CPF contributions by employers after a very long time; and

(e) We finally also showed that we became very serious about supporting entrepreneurship and small and medium enterprises with one of the best sets of budget measures for start-ups and SMEs.

Sir, my GPC met with a group of industry experts to get the feedback on the Budget that was announced on 15th February and I am glad to say that most of the responses have been very favourable. In fact, many were not expecting the Government to be so generous this year. In my speech today, I will reflect some of the reactions from these industry experts, and therefore my speech will be a long one.

Revenue structure for the future and related issues

The revenue restructuring measures

Sir, we are no doubt seeing a trend of shifting from direct to indirect taxes but are we moving too quickly?

In the Budget, there were several measures announced which affect the revenue for the Government. These are the reduction of corporate tax to 18%; the increase of the Partial Tax Exemption from $100,000 to $300,000 for companies; amendment of the Constitution to allow capital gains to be used as part of the Net Investment Income; and also raising of GST to 7% with effect from 1st July.

Sir, the first two measures are geared towards improving Singapore's attractiveness as a corporate destination and the industry feedback is that these measures should stimulate growth in the economy. It should also provide the SMEs with a shot in the arm. This should also help keep our corporate tax structure abreast or ahead of leading competing economies,

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such as Hong Kong and some strong challenges from Eastern Europe.

Sir, the Government expects a hole in revenue of about $1 billion, I calculated, from the cut of all the taxes announced. To plug this hole, the Government plans to raise income or revenue by two measures - first, by increasing the GST, and, second, by expanding the definition of Net Investment Income (NII) to allow the inclusion of capital gains.

Role of GST as the other source of revenue

Sir, indirect taxation, such as the GST, will go, in part at least, towards helping the Government to pay for its investments in the economy and the workforce. Huge infrastructure investments are planned to help accommodate the 6.5 million population that we plan to have here in Singapore in the near term. While we understand that GST increases will help fund such expenditures, should we just depend on GST to fund these? If so, I can see the GST going up to 15% in the next 10 years and this will render Singapore uncompetitive. Equally important, is it fair then to shift, and to continue to shift, the burden of paying for these investments onto the man-in-the-street who pays GST? Is that too much of a burden to put on the ordinary Singaporean? Should not the revenue equation be rebalanced to depend more on our reserves than taxing Singaporeans?

Sir, utilising more of the reserves for funding growth is not a wrong thing to do. After all, such spending is not money spent for yesterday or today, it is for the future. And I still remember very clearly the scolding Dr Wang Kai Yuen got in this House from Minister Mentor when he suggested a few years ago that we dug into the reserves to help the plight of senior citizens as a result of the recession

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that Singapore faced. In his speech in this House, he said that the "reserves are not for yesterday, they are also not for today, but they are for the future". With the redefinition of the Net Investment Income (NII), to include capital gains, we have now recognised that the reserves play and indeed must play a key part in facilitating investments made now into the economy to safeguard its future. Expanding this definition is a positive move as it will allow the allocation of more resources from our reserves to make strategic injections into the economy.

We have already modified the amount that the current Government can use from the income from our reserves two times. This means that we have been too conservative on allowing spending of our reserves up to now.

I am waiting to hear what the new definition of NII is, but what I think we really need is a formula which gives certainty to the Government as to how much it can spend each year. One suggestion I have is how the USA university endowment funds utilise their reserves. Many USA universities have spending rules which peg the spending to a certain percentage of the current value of their endowment fund. In other words, spending is not limited only to the returns made but also to the total value of the fund. It is quite typical for them to spend between 4% and 6% of their fund value. Whether or not the actual income from their funds for the year is lower or higher, the spending is not affected. I hope that the Government will consider this approach and not just depend on returns for the year, which we now practise. This way, the Government will have better visibility and will be able to forecast what is available to spend each year. This will also give a constant flow of income for the Government, thus not having to rely on significant GST increases in the future.

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GST exemption for certain items

Next, on GST. Whenever GST increases, people will feel the impact by way of increased expenditure and therefore the increased financial burden on families. This is the reason why the Government has given out GST offset measures when introducing and then increasing GST. Offset measures, however, are ad hoc in nature and quite unsettling as everyone knows that there will come a day when the relief that they provide will come to an end. There is a need for something more permanent than offset measures. One possible solution is to zero-rate or GST-exempt certain basic products and services, such as food items like rice, flour, salt or sugar; education expenses at all levels; healthcare and medical treatment, and perhaps even HDB purchases and rentals.

The Government may say that exemptions are difficult to administer. But the Government is already introducing $4 billion worth of offset measures with a very complex set of implementation measures that will cost the Government significant money to administer anyway - considering the variety of reliefs that are being provided, ranging from things like U-Save, SC&C rebates, CPF top ups, to cash payments. If despite this, there is still a difference in views about whether we have found the right balance of who gets what and whether we have distributed enough to certain categories of Singaporeans, then I suggest implementing a zero-rated GST system or GST exemption system for certain categories of products and services, which I have mentioned, without the complexity of administering that comes with it.

Considering that GST exemption is already practised for certain types of businesses and that this year, in fact, the Minister further allowed zero rating for the

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service, purchase and leasing of containers, the argument on difficulty of administration is therefore not tenable.

Another argument may be that the higher income will benefit more. To this, I say, "So what?" We know that the higher-income spending public spends more and therefore will benefit more from the GST exemption. But my question is, "So what if they do benefit?" Along with them, the low-income spending public would also benefit significantly too. So why not such an exemption for basic items?

I think it is worth considering such a GST exemption system to give comfort that the long-term impact of any GST increases will be manageable and will not depend on how generous the Government is with offset measures or when the offset measures expire. This will eliminate the need for ad-hoc subsidies and rebates from the Government each time GST increases are implemented. The net effect will be peace of mind and a feeling of assurance that future GST increases will not price essentials out of reach.

Moving away from a crutch mentality

Frankly, by giving out offset measures in the form of subsidies and rebates almost continually since we first implemented GST in 1994, we have developed in Singaporeans an entitlement or subsidy mentality. I do not think that this is a healthy situation for the country in the long term. I would rather have a system where Singaporeans do their own calculation of what the impact of GST will be for them and they manage their spending. Knowing that certain important items are GST-exempt will give them the comfort that they will be able to manage comfortably as long as they do not overspend on non-essentials. I am sure that the income loss from the GST exemption system will be much less than the $4 billion or other such sum of offset

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measures that we give out each time the GST goes up.

Middle income insecurity

Sir, another issue to consider is that the offset measures were targeted mainly at the lower-income. The middle-income group received little attention in this present Budget. This is the sandwich group of Singaporeans. We have been struggling to find a way to equitably offset the impact of GST for this group and have not been successful so far. By zero-rating certain items, this group of Singaporeans will have the comfort that they will also be able to manage at least some of the impact of the GST increase. I think that if we zero-rate some items from GST, the middle-income or the sandwich group will come out better overall in terms of deflecting the full impact of the GST increase. This will also address some of the insecurity that they typically feel whenever things like GST increases happen.

Budget for SMEs and businesses

Sir, let me now shift to the impact of the Budget on the SMEs and businesses. The financial services sector has welcomed the removal of the 80:20 rule which was restrictive for non-resident funds. This will no doubt make Singapore a much more attractive place for such funds. As has been the case for the past years, the financial services sector again received many enhancements for incentives which will go a long way to entrench Singapore as the main financial hub of this region.

Without doubt, this Budget is one of the best for small and medium enterprises, with many measures to help SMEs become more competitive. We have the 18% corporate tax reduction, the partial tax exemption threshold rising from $100,000 to $300,000, rebates on CPF contributions for two years, and the

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lowering of the foreign workers' levy by $30. Even the Workfare Income Supplement (WIS) scheme will help SMEs. They are, therefore, all pleased that the Government is now paying special attention to them.

Now that we have come up with some good fiscal measures, we need to therefore shift the focus on the need to restructure the way the Government supports SMEs, and many Members of this House have spoken about the one-stop local enterprise champion agency that will be able to better support companies, and I will elaborate more on this during the Committee of Supply on the Ministry of Trade and Industry.

But, Sir, today, companies start to globalise the day that they are started up and they need a more wholesome support from one agency instead of having to go to three different agencies, eg, EDB, SPRING and IE Singapore, which may not necessarily be the right approach for them.

Issue of cost-competitiveness

Sir, while the Budget measures announced this year are far-sighted, there are, however, issues on cost-competitiveness that the measures do not address. I will consider these here. As in the past, when the economy was booming, we inevitably allowed cost to increase on a broad base, sometimes making Singapore relatively uncompetitive for certain businesses. This has happened to us before. In fact, it happened to us twice in the 1990s and, when that happened, the Government had to form the Cost Review Committee in 1993, followed by a Cost Competitiveness Committee in 1997, and this was to address the cost increases over the years when the economy's performance was good. Then again, in 2001, we had the Economic Review Committee to evaluate our competitiveness and cost was also one of the major issues at that point of

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time. We therefore cannot allow cost increases to again derail our economic growth.

We are, in fact, already seeing what I call a triple whammy for cost increases for businesses. First, rentals have gone up and continue to rise. Second, wages have gone up, plus the additional one-and-a-half percent increase will also impact the cost of labour for companies here. Third, input costs will also go up as a result of the GST increases, and this is more significant for smaller companies that are not GST-registered. Over the past year, we have also seen cost going up in the areas of utilities, transport, stamp duty and many others. We need to slow down this trend of cost increases. Let us look at two areas in particular.

Higher rentals

First of all, high rentals. One of the issues that came up strongly during the discussions with the industry groups we had was the inflated rental market that is hurting businesses and individuals. In fact, the lack of space is an issue for them too and, therefore, cost is going up. There is also a worrying trend for SMEs of JTC looking like it will exit the business of being an industrial landlord. JTC has fulfilled a key role in providing leases of industrial land at rentals that are comparable to industrial space costs in competing economies. The divesting of assets by JTC to commercial entities, eg, to REITS, would generally mean higher rentals in the future. If we leave it to market forces, inevitably, because of land scarcity, industrial land will get outpriced. Certain activities might still be viable here, if not for the price of rentals and land. I suggest that the Government re-look at JTC's plans.

Labour cost

Sir, labour cost remains a key concern

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for businesses. In addition to the increase in CPF, tightness of the labour market has also resulted in increasing wages. The sectors badly affected are the construction, food and beverage as well as the hospitality industries.

A big factor behind the labour shortage are the regulations in place determining the proportion of foreign workers to local workers, as well as the source or country of origin of the workers. I suggest, therefore, that the labour rules need to be changed to give greater flexibility to companies in selecting their sources of labour, instead of depending on the Government to dictate which source is traditional and which is not. I understand the need to balance this liberalisation to keep wages at acceptable levels for Singaporeans too, but we need to keep in mind the larger picture of keeping industries here in the first place.

Introduction of Workfare

Sir, this is definitely a positive move, and my comments are as follows.

First of all, we have seen from the results of the data published by the Department of Statistics that wage levels of Singaporeans rose marginally in 2006 and, this, after two years of good economic growth. However, wages are almost stagnant, and that too, when Singapore is experiencing good growth and a tight labour market. It is therefore clear that there are many Singaporeans who need their wages to be supplemented to achieve or maintain an acceptable standard of living and lifestyle, especially as costs continue to rise.

We have finally come to the point where we recognise the need for some subsidy for lower-income workers to keep their wages at an acceptable level. This is good. But it is also a sign of the times to come. We may need to expand Workfare, especially when it comes to

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delaying the departure of important industries and keeping these sources of employment here in Singapore. Sir, globalisation has levelled up the labour marketplace. If we price our labour too high, companies can easily relocate elsewhere in the region. So, wage levels are very much not in the Government's control. We have little choice but to put in place a wage or income supplement measure. Under these, we will allow companies to pay what they are willing to pay for a certain category of job, with the Government coming in to supplement the wages to allow Singaporeans to support a certain lifestyle and to cope with the cost of living. That the Government has done so is recognition that it is able and willing to re-examine even sacred cows when the need arises. This, I think, is good news for us. It is a fundamental shift in the Government's thinking on welfare.

Sir, now I move on to discuss the issues that were left out of the Budget.

First, as expected, some of the participants during our feedback session expressed disappointment that the Government failed to address two areas which, if addressed, could have made the Budget cover all bases.

No cut in individual income tax

First, is the cut in personal income tax. This was one of the most anticipated changes for individuals which did not materialise this year. I can understand the Government did not see a need to do so, especially in a good economy. I thought that it would have been something that we could have done not just for Singaporeans but also to attract more high-income earning foreigners to take up residence here.

We all know that there is a global competition for professional talent and it is heating up, and it is a race by many countries to attract the best to their

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shores. The reduction of the personal income tax to 18% would have been very useful in our quest to attract talent. We may have lost the opportunity to attract some of these professionals who may now choose to locate themselves in Hong Kong.

The second issue created by this differential tax rate between the corporate tax and the individual income tax is this, ie, individuals at the 20% top bracket will now have to pay an additional 2% tax on the franked dividends received in 2007 and beyond, if the tax changes do not happen. So, the net effect for the higher-income earners in Singapore is that they will end up paying higher income tax, higher than the 20% level that they had paid in the past.

Estate duty

Sir, the second disappointment was the estate duty. The Government has been considering this for some time, but has again decided not to decide. This surprised and disappointed some among the high net worth Singaporeans as well as foreigners resident here, because, last year, when the Prime Minister delivered the Budget speech, he indicated that, after two years of deliberation, he will make some changes to the estate duty this year. At least, this is the impression that all of us have.

Sir, many countries have already abolished estate duty. Aside from Canada, India, Australia, New Zealand, Italy and Sweden, among others, our nearest competitors, such as Hong Kong and Malaysia as well as Macau, have done away with it. Many arguments have been made in favour of abolishment of estate duty and I will not repeat them here.

I feel that we have a case to abolish estate duty again, not just for

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Singaporeans in Singapore but also as we try to attract many more high net worth individuals to form the 6.5 million population that we are targeting. These high net worth individuals will be paying higher taxes and will spend here and therefore contribute towards higher GST collections by the Government and, if we add all these together, they may just outweigh the loss in estate duty tax collections.

Sir, in conclusion, the Budget this year is a significant milestone for Singapore, one of the boldest in a long time. This Budget will be remembered for two significant changes in the Government's mindset. First and foremost is the introduction of social safety nets for lower-income Singaporeans. Social safety nets were almost a taboo in Singapore, but now we have the WIS. The second reason why this Budget will be remembered for a long time is because of its particular focus for businesses, especially for SMEs. SMEs many a times felt left out in past Budgets. The Budget this year will go a long way in making Singapore a competitive economy and an inclusive society. I am sure every Member of this House will wholeheartedly support this Budget. So far, we have not heard any complaints actually about the overall Budget that has been announced for all Singaporeans and for all quarters of society.

Sir, I therefore support this wonderful Budget that the Minister delivered.

12.58 pm

Ms Jessica Tan Soon Neo (East Coast): Mr Speaker, Sir, I rise in support of the Budget Statement for financial year 2007/2008 presented by the Second Minister for Finance, Mr Tharman Shanmugaratnam.

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I believe that many will agree with me, as well as from the feedback received, that this Budget Statement for financial year 2007/2008 is a focused one that is targeted at ensuring that Singapore is investing and positioned for growth. It is also trying to provide for all segments, as our colleague, Mr Inderjit Singh, had alluded to earlier, while benefiting the lower-income earners to address the widening income distribution gap.

I must congratulate the Second Minister for Finance for a Budget that while introducing tax changes to drive growth and operating revenues, it is one that gives equal attention to addressing the impact of these changes for both individuals and businesses. For example, the impact of the 2% GST increase is cushioned with the GST offset package comprising various credits and rebates. What is significant is a fundamental change in the Government's policy on addressing the widening income distribution gap through Workfare Income Supplement (WIS) scheme. This is not a one-off scheme to support lower-income workers but one where, on a continuing basis, assistance is provided for those with income below $1,500. I do hope that this however is not viewed as an end in itself, as it is really meant to be complemented with growth. Workfare, while providing support for the low-wage earners, will enable them, where possible, and must enable them where possible, to participate in the areas of economic growth, thus enabling them in the longer term to earn higher wages.

The Budget is also one that promotes building capabilities for Singapore's future. Through additional investments in R&D, promoting new sectors of economic activity, enhancing the economic infrastructure, eg, connectivity,

building Singapore as a global hub, education for both the young and continual learning.

One area, however, that I feel will continue to need attention as we drive for

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growth is that of people. To have sustained and quality growth for Singapore, people and talent are key. Globalisation presents opportunities and challenges for Singapore. Technology advancement enables new business models and shifts our behaviour. Unconstrained by size or geography, people now interact across geographical boundaries, new connections, relationships, and business models are evolving. This is changing the landscape and competition for talent. Today, the industry and the labour market are already experiencing the impact of foreign talent and competition from low-cost markets. Increasingly, we are now seeing a shift and strain on the knowledge worker. As much as this will hold greater opportunity for our highly skilled and educated workforce, it will, if we are not careful, lead to a drain on our own talent beds.

The Singapore brand, as many of us know, is both an opportunity and a challenge as a Singapore talent is valued. But this very fact, in itself, is also increasing competition for limited labour and talent. With our high employment situation, where employment for resident population was at 3.6% last year, higher-value added jobs taken up by PMETs forming about 47% of resident workforce and an ageing population of 52% of resident workforce aged 40 and above, we will need to continue to ensure that we are able, as a country, to attract, develop and retain talent.

This will also call for more effective and creative Government policies and services to provide the structure and support for growth and talent. Singapore must continue to be an open and globalised economy to make it attractive for investment and talent to make Singapore a base for business and growth. With the positive economic outlook and the Integrated Resort, there is increasing concern, especially in the service sectors and expressed in the many

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dialogues that we have had on the constrained labour situation here.

To share my own personal experience, in my commercial work, I face the on-going challenge of finding the right talent to fill key positions to support our business growth, both in Singapore and for the region where we have operations. So even taking day-to-day examples, I recently spoke to a friend who shared with me that her sister-in-law was asking her son to brush up on his Mandarin so that he could look at prospects of working in China. It is good that local talents are able to leverage and compete in the global markets.

It is, however, worrying if there is a net outflow of talent. The Budget does clearly encourage workforce participation. However, more can be done to develop and retain talent for Singapore. These could range from the personal income tax to quality of life programmes and more conducive work arrangements that will allow for greater participation in the workforce.

In 2006, there were one million economically inactive residents. 38% cited family responsibilities as the main reason for not seeking work. 24.5% of economically inactive residents have attained polytechnic diplomas or degrees. Having employment policies and programmes promoting flexible work arrangements will definitely help in encouraging greater workforce participation of this segment.

So we must also not forget another important segment that needs talent. The retention of talent in our public sector will also be crucial for the on-going development of key policies that help Singapore stay competitive and forward looking. With an aggressive growth agenda, we will need the right talents to set the right policies, to create and

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sustain an environment that companies and individuals will want to leverage on as a base for their growth. This retention will be made all the more difficult as the competition for talent heightens in a global labour market.

The Budget measures taken to reduce costs for businesses operating in Singapore and for SMEs are viewed positively and from the many feedback which we have received, this clearly has been welcomed. But as the GST increases, with the effective date of 1st July 2007, this will mean that businesses only have a few months and will have to gear up quickly to prepare for the change and to understand the impact of the changes to their businesses, especially for the smaller companies. In our pursuit, to quote Mr Tharman Shanmugaratnam, "in making Singapore the best place to start, grow and globalise businesses, more can be done to create supportive environments to support SMEs".

A small example is the current GST filing and payment schedules for SMEs. The current filing requirements and payment terms are not really in sync with the operations of most SMEs, as most operate under 90 days to six months' payment terms with their clients. Hence, refinement to the filing and payment schedules for GST can help minimise cashflow impact for SMEs and this could prove a good win-win situation.

Although the Budget Statement does include expenditures to enhance the quality of life in Singapore with quality infrastructure, for example, the Active, Beautiful, Clean (ABC) Water Programme, the park connectors network, the upgrading programmes, etc, I must say that I was surprised by the lack of any attention on the energy consumption trends and initiatives to address the growing concerns on the impact of global

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warming. I will be the first to admit that I am no expert in this area nor an active advocate. However, as a country, dependent on the global market for growth of our economy, we cannot ignore the need for more responsible energy consumption. Some may argue that Singapore is small and, hence, does not contribute much to global warming pollution and greenhouse emissions. It is precisely that Singapore is small that we need to pay attention as it will impact our living conditions with our high and growing population density. And even if we take a purely economic view on this, there is a business case as there are implications for both companies and industries with potential regulatory actions from countries and companies that we do business with internationally.

Aptly, as the theme for the Budget Statement for 2007 is, "Ready for the future and ready for the world", we must continue to be bold and compete in an increasingly global economy. We must never forget that success is dependent on people and, therefore, our focus should be on developing and retaining the people that choose to make Singapore the base for their success as well as the quality of living conditions that make us proud to call Singapore home.

With that, Mr Speaker, Sir, I support the Budget.

1.04 pm

Mr Zaqy Mohamad (Hong Kah): Mr Speaker, Sir, I rise to add my voice to the chorus of support for the motion.

This festive season, there are many reasons for Singaporeans to smile. Our economy has been upbeat and this year's Budget adds to this confidence and boosts these positive sentiments further.

Budget 2007 has been generous, yet balanced in helping the lower-income

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group and the elderly - as well as recognise their contributions of the higher-income earners. More importantly, I am glad to see this Budget investing heavily in growth - infrastructure, industries and people - to open up opportunities for Singaporeans to take this country, their families and themselves to the next level of development.

Mr Speaker, Sir, allow me to begin the first half of my speech in Malay.

( In Malay ): [For vernacular speech, please refer to Appendix A.] The message in the Budget this time is very clear. It is a Budget package which is far-sighted and prepares Singapore in facing the future and seizing the available opportunities in this globalisation era.

Therefore, I believe that Singaporeans will have to make full use of these open opportunities and, at the same time, put in more effort to develop our field of professionals, managers, entrepreneurs and workers who are capable and are of resolute spirit.

This Budget shows Singapore's long-term struggle for survival in a globalised economy. It affects each and every one of us - students, workers and also housewives.

For the lower income earners, it cannot be denied that Government is always concerned about them. This is clearly shown in this Budget where Government will increase the investment in training and retraining. For the needy ones, the Budget this time provides various assistance and programmes but this should not be considered as a free gift. We have to see the Budget this time as something that motivates us to up our effort and enhance our employability, to enhance our lives and family. To seize various opportunities, our workers have to develop their capabilities so that they will

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be able to perform value-added jobs and participate in new industries.

I hope young Singaporeans will also take advantage of the opportunities as this Budget has placed emphasis on education. They will have more opportunities in education which is an important investment for the future.

Through this Budget, the Government will intensify efforts to attract more investment and create more jobs for Singaporeans. Therefore, we have to develop ourselves so that we will be more competitive and think globally.

For the Malay/Muslim community, we have to move out of the comfort zone. We should not be afraid to face stiff competition. In fact, we have to be prepared to face it. I believe the Malay/Muslim community can do it. This is because, among the community, there are those who have succeeded. Professionals, entrepreneurs and military officers have emerged as the best in the international arena. They have flown our national flag and made us proud. I believe many more will succeed.

At the same time, for those who have succeeded, we hope that they will contribute back to the community. We cannot allow differences in the community. If there are differences, each group will develop at their own pace. Let us be one class, first class citizens in a first-world country.

I would like to end my speech by reciting a quatrain which says that we should not wait or delay. Instead, we should reap the benefits of the opportunities so that we can progress together.

( In English ): Mr Speaker, Sir, allow me to proceed with the rest of my speech in English.

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Resilient workfare, relevant to global demands

Sir, I appreciate the Budget's investment in our people, particularly in education and skill development. However, I believe that we can do more to provide for the middle layer of our workforce - the professionals, managers, executives and technicians (PMETs).

I believe that more can be done to develop the potential of this segment to take Singapore to the next lap. The PMET segment is key to the growth and success in each of the business industries that they come from, yet this same group was also one of the hardest hit during the recent downturns.

We have upped our efforts to re-skill our blue-collared workers, and the industries, no doubt, today, already recognise the value of talented senior managers whom they court and talent spot locally and globally.

Sir, today, many mid-managers and skilled specialists in their 40s and 50s are still having difficulty finding employment. Many were told that they were over-qualified for jobs. Many others have found it difficult to swallow, having to take severe paycuts when they change their line of work. So is this the way forward for PMETs in the future?

Today, many employers I have spoken to still feel that Singapore does not have enough local PMETs with skills that are relevant to the industries of the day. But, however, on the overall, PMETs, they say, are still in demand to run their sales and operations here. The availability of mid-segment talents is often a deciding factor if they should expand their bases here or they need to relocate because of better business environments elsewhere.

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Therefore, many employ foreign talent to fulfil their middle-segment workforce requirements, requirements that drive business and growth and these include mid-management talents in sectors such as trading houses, info-communications, hospitality and the retail sectors. And many such foreign talents here are attracted by the relatively good pay packages in order to attract them to Singapore.

So the question I have is: why are we not putting in as much effort to develop our PMETs to take on these high-value skills and responsibilities? We have done a lot to ensure the relevance of our blue-collared workforce, emphasised more on training and subsidised employers for workforce development. Can we do as much and give as much emphasis to the PMET segment?

I believe that agencies involved in the workforce development need to do more than certification of technical and professional skills. To ensure that they remain relevant and value-add to the economy, we need to equip them with high value skills such as management in a cross-cultural, multi-national setting, brand development, an international outlook on problem-solving and sales and customer-facing skills.

For employers, the Government needs to do more to promote talent development and especially for PMETs. I believe that this component is often missing, particularly in the SME segment which employs almost 50% of our workforce. Many do not have the luxury of time or money to invest in high-value training. I will cover more on this topic in my COS cuts.

In the long term, I believe that this investment in high value-add training and talent development for the PMET segment will bring about greater industry growth, make Singapore more attractive to foreign

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investments - be it corporates or global SMEs. In turn, we may have a viable long-term solution to develop a middle-income segment that will be more resilient, more capable and more relevant to the global economy so that they and their families will enjoy better salaries and better quality of living.

*Cols. 1747-1750.

Investing in our future, investing in our social fabric

As a young Singaporean, the Budget makes me feel confident about our economy and I applaud the Government's efforts to invest heavily in our future. While we invest in our industries, infrastructure and human resources, we should invest just as much in strengthening our social fabric, especially as we embrace globalisation, the influx of foreign talent and the free flow of information through the new media.

We must continue to strengthen our social cohesion because religious and racial conflict can and will destabilise the foundations that this Budget is trying to build for our future.

Today, besides being a trade hub, Singapore is also a hub for information and, today, with the Internet, we get as much information as misinformation. I do not know about my colleagues, but I have seen a lot of cartoons right after the GST announcement. We have elite cartoons and the works. I can tell Members that the Malay community has not been spared either. Among the Malay media, this is my recent favourite. I think some Members may have seen it - the Malay Master Plan. Some conspiracy theory says that the guy with the guitar in this cartoon is a left handed guitarist - and we all know that the Minister in charge of Muslim Affairs is left handed!

Back to a more serious topic, racially insensitive productions are readily available on the Internet today, such as

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the "RK Prata" podcast on YouTube recently. The clip recorded a conversation between two apparently Chinese customers asking for pork dishes at a supposedly Indian-Muslim restaurant, with the Chinese customers mocking the Indian-Muslim server's reactions to their requests.

Many post-65ers, like myself, may not have experienced the racial riots of the 1960s. But we can surely learn from history, such as the Maria Hertogh riots in the 1960s which were started by a single picture published in a newspaper. Today, modern communication technologies have greater potential to create such tension with swift and dramatic effect, with technologies such as video MMS. For those Members who are not familiar - remember how Tammy the polytechnic student became infamous - clips that can easily incite racial conflict can be circulated pretty quickly, and we are not even sure if the incident was staged like the "RK Prata House" podcast.

Therefore, as our young become more globalised, we need to pay serious attention to issues that can divide us, and divide the country. Moving forward, with inflows and outflows of talent, radical ideologies, tensions within religions, such as between the Shi'ite and Sunni Muslims in the Middle-East, and even influences from the caste system practised by foreign ethnic groups may find its way into our social fabric.

So, let us not take our harmonious social fabric for granted because the alternative may be too painful to endure. This is one pillar of success that we must continue to invest in, especially as we embark on our next lap of development.

Closing questions

Mr Speaker, Sir, I support the Government for taking the bold move of presenting a holistic Budget – one that

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invests in its people, their talents, its infrastructure and technology – that is focused on our continued competitiveness and survival as an economy.

Before I end my speech, I would like to leave two concerns with respect to the Budget for the Second Minister for Finance.

(i) What measures does the Ministry of Finance have in place to ensure that market forces will not counter the intended objectives of the Budget? For example, as raised by Mr Inderjit Singh earlier, (a) the impact of steep rises in rental rates on business costs, despite corporate tax cuts and incentives; and (b) stagnation or reduction of gross salaries of low-wage workers, given the Government's implementation of the Workfare Income Supplement scheme.

(ii) What measures does the Ministry of Finance have in place to ensure that the increased Government revenues through the GST and NII will not result in increase in upscale infrastructure or projects - I think, years ago, we remember the seven great wonders - that will diminish the Government's efforts in the past few years to improve cost-efficiency in the Civil Service?

Mr Speaker, Sir, with this, I support the motion.

1.20 pm

Mrs Josephine Teo: Mr Speaker, Sir, following the Budget Statement on 15th February 2007, I asked fellow union leaders for their feedback. This year's Budget has been dubbed a "3G+3C" Budget. The 3Gs refer to the Budget being "great, generous and gracious". Indeed, from a worker's perspective, there is very much to cheer about.

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First, our low-wage workers will be given a leg-up through the Workfare Income Supplement Scheme. Union leaders were happy that Workfare would not only become a regular part of our social safety net, they were also happy that it would be extended to cover workers earning up to $1,500 as well as those between 35 and 40 years old. At the same time, informal workers have not been forgotten. They may not yet be contributing regularly to CPF, but by just contributing one-third of the Medisave portion, they could get two-thirds of the Workfare benefit.

The second thing to cheer about was the increase in employer's CPF contribution rate from 13% to 14.5%. The third was the Senior Citizen's Bonus. The fourth pleasant piece of good news was the GST offset package, which many felt was quite generous.

But besides being a 3G Budget, it was also a 3C Budget. I think this is quite well known now. While union leaders appreciated that the Budget was "comprehensive" - the first C - they also gave the feedback that it was a bit "complicated" and somewhat "confusing". Their feelings are understandable, because even for MPs, it takes a while to figure out all the components of the Budget. So I would hope and I believe that one of the first priorities for all of us is to help the general public and all Singaporeans to understand how the various new schemes will help them. Therefore, I hope that the Government would work out a comprehensive communications plan so that the various initiatives are well understood.

Sir, speaking to union leaders and residents, I can see that some features of our Budget may take some time to understand. I would like to highlight just two of these.

The first is why most of the Workfare Income Supplement will be paid into CPF

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accounts. The obvious question is that if the scheme is targeted at low-wage workers, does the Government not understand that for them "cash is king"? Is the Government being insincere about wanting to help? This is especially so for informal workers who are not yet contributing to CPF.

Sir, these questions are understandable. Let me share the examples of two families to illustrate why I support the use of Workfare to build up our CPF accounts. Both families live in Toa Payoh. To protect their identities, I will just refer to them as family A and family B.

When I visited family A some weeks ago, I met Mr A who is in his 40s and he had been ill for about a year. As he had been going in and out of hospital for treatment, he has stopped working. His wife can only work part time. She has to help him and they have two school-going children.

I asked how he was coping financially. He told me that though he had stopped working for some time, he still had enough money in his Ordinary Account, and he could continue to service his mortgage loan. He also has money in his Medisave to help pay for his medical treatment. His mother and his siblings visit him regularly and he is hopeful that he can get back to work in a few months. In the meantime, his wife supplements the family income.

Family A is not rich - in fact, they are quite typical - but neither do they have to worry about having a roof over their heads nor do they need to seek financial assistance from other family members, even in time of need like this. They certainly did not plan for Mr A to become ill. I think none of us plan to be ill. But the degree of financial independence provided through the CPF savings has helped to ensure that the family relations are not strained.

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Incidentally, the following weekend, I met family B. Mr B is a filial son in his 50s. Besides looking after his retired father, he also looks after his bed-ridden mother. His mother is a stroke patient for more than 10 years.

Mr B's parents did not have formal education and neither were they employed formally. So they do not have CPF savings. The burden falls entirely on Mr B who unfortunately also does not have CPF savings. So here is a family basically out of the CPF net. Mr B has other siblings but they have families of their own and cannot help much. I gathered from Mr B's muted response that his siblings did not visit much, and he was left to care for his elderly parents on his own.

Sir, I am sure my fellow MPs have similar stories to tell. The two starkly different examples explain very clearly why, in the longer run, we must encourage all Singaporeans to be covered by the CPF. So, yes, even though informal workers will have to set aside some money from their salary to contribute to Medisave to enjoy Workfare, it will help them to be better prepared for unforeseen circumstances in the future.

Having said that, Mr Speaker, Sir, I do think it is necessary for us to also take concrete action to help Singaporeans who are not yet covered under CPF to make a modest start, perhaps through Medisave and eventually full CPF coverage.

The NTUC has already started to do so, working with unionised companies to help create better awareness of the issue. Through the Unit for Contract Workers, which is headed by my colleague, NMP Ms Cham Hui Fong, workers who used to be employed informally through third party labour suppliers are being "converted" into direct employees with full CPF benefits. It is not an easy journey

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and we have to work very closely with companies, but slowly and surely we are persuading them and converting more. Some of these workers were featured recently in a Lianhe Zaobao article, and we hope that more will come forward and benefit from such schemes. As the estimated number of informal workers exceed 100,000, much more work needs to be done. So this is something we have to work on.

Mr Speaker, Sir, while welcoming the measures to help low-wage workers, some Singaporeans also felt that besides increasing the CPF rate of contribution, the Budget did not provide any obvious benefits to the middle income. So how then will the middle-income earners gain from this Budget? One, I believe, is the 2% cut in corporate income tax. Workers do not benefit directly from this, but the companies that employ them do. A reduced corporate tax rate makes Singapore an even more attractive investment location. It provides the impetus for more companies to relocate to Singapore, and for those already here, to increase their investments. This, in turn, creates new jobs and better pay for Singaporeans.

As a real-life example, a union leader told me that in the aviation industry, skilled workers are being offered salary increases of nearly 30% to move to new companies that have been set up. I think this is something that is positive, something that encourages all of us to have something to look forward to in the future.

Therefore, while the corporate income tax cut does not go directly into the pockets of workers, many of them will benefit from the increased profitability of their companies, as it leads to higher investments and job creation. In this way, the Budget provides real tangible benefits to middle-income earners.

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There are other ways that upper middle income earners are benefiting. Over the Lunar New Year, I met an old friend. His name is Ching Meng Chew, and he has worked for over 10 years in China, and he provides a very good example. Soon after Meng Chew graduated from the Building and Estate Management programme in NUS - in fact, he told me that Dr Amy Khor was his lecturer - he decided to take the plunge to join a multi-national, basing himself, firstly, in Shanghai and then in Beijing. He was able to operate effectively in China and act as a useful interface with his non-Chinese colleagues.

Meng Chew is planning to relocate back to Singapore. The key reason is that his son is now seven years old. Meng Chew felt strongly that in the same way that he has benefited from Singapore's education system, so too should his son. So, with the help of his family who are still living in Toa Payoh East, his son has already started Primary 1 classes at First Toa Payoh Primary School, and is now the class monitor. Indeed, his son will be one of the first beneficiaries of the Post-Secondary Education Account (PSEA). I tested Meng Chew. I asked him, "Although you are living overseas, do you know about the PSEA? He said, "Yes, I am fully aware of it." So, that is good.

Meng Chew tells me that while his son was very comfortable speaking Mandarin, he is now equally comfortable speaking English. It took him just two months of being in the Singapore school system to be very comfortable with the language. This is exactly what Meng Chew had hoped to see - his son becoming bilingual like he is

and having the opportunities that he has today.

So while Meng Chew would like to relocate back to Singapore as soon as possible to join his son, much of it also depended on the availability of good jobs

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in Singapore. And because many companies based here serve as regional headquarters, Singaporean executives like Meng Chew who have work experience in regional countries are highly valued. Singapore's connectivity with the rest of the world helps to anchor economic activities and jobs here. So even though the markets are elsewhere in the region, the work can be found here.

For Meng Chew, there is another benefit from the relocation back in Singapore. He tells me that, in China, he has to pay personal income tax of between 30% and 40%. He asked me not to reveal the exact percentage because that would reveal his own income as well. So I promised him, 30% to 40%.

Back in Singapore, he knows that even in the highest income bracket, he will pay no more than 20% of his income as tax. So though the Budget this year did not reduce personal income taxes, as many of us had hoped, the introduction of GST has broadened the tax base, and this has given the Government room to keep personal income taxes low. Competitive income tax rates, coupled with our efforts to transform our island landscape, will help Singapore to stay competitive in the global war for talent, as Mr Inderjit Singh has also mentioned.

More importantly, Meng Chew's example shows that many investments in our physical, economic and education infrastructure generate long-term benefits for Singaporeans, providing them with geographical mobility and enabling them to earn higher incomes.

Mr Speaker, Sir, I came to the conclusion that while the Budget does not specifically target middle-income groups, most of them will rise with the economic tide and have the opportunity to do better year after year. So the outlook for the next few years is a very bright one and

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we have every reason to be confident. But like my colleague, the honourable Mr Zaqy Mohamad, has mentioned, one of our key challenges will be to help as many of our professionals, managers, executives and technicians (PMETs) ride the economic tide. And, indeed, we do need to recognise that many of our PMETs had been affected and continue to be affected by economic restructuring. Therefore, I hope to hear specific plans and efforts that we will put in place to help PMETs secure more of the new jobs created, whether they be in digital media or in hospitality industries.

Mr Speaker, Sir, please allow me now to speak in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, this year’s Budget has created the conditions for a brighter future for Singaporeans. In addition, the Government has also fulfilled its promise to help lower-income Singaporeans, by introducing the Workfare Income Supplement. As a representative of the labour movement, I would like to express workers' heartfelt thanks to the Government.

For middle-income earners, the most important thing is for their wages to rise steadily over time. The labour market does indeed show signs of rising wages. The economic upswing is welcome news. As the corporate tax has been reduced, there will be further stimulus to our economy.

However, I believe it is also necessary for us to avoid overheating. Why do I say that?

Everybody is aware of the story: the goose and the golden eggs. In the story, the owner of the goose was impatient and killed the goose in the belief that he would get more golden eggs faster. Alas, he

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was to be disappointed by the loss of both the goose and the hen.

Our enterprises are like the goose, while the golden eggs are like rising salaries paid to workers. Enterprises that perform well are well-positioned to give their workers more "golden eggs". However, if we do not look after the health of the goose/geese, and are impatient for more golden eggs to be laid, we may inadvertently cause the goose/geese to fall sick, and workers are the ones who will suffer in the end.

The "geese" may look healthy now, but if wages rise faster than productivity, and operating expenses increase too quickly, companies’ profitability will be affected, and the workers' happiness (because of fast-rising wages) a short-lived one.

A better approach is to moderate wage increases, so that workers can enjoy more sustained and stable wage growth. In this regard, I hope that the Ministry of Trade and Industry and the Ministry of Manpower will coordinate closely to monitor the relevant indicators, and to take the necessary steps to avoid over-heating. This will allow workers to enjoy more steady wage increases in the next few years.

In addition, I hope that MOM and MTI will work closely together to help more Singaporeans to take up the new jobs created. As reported in the press, various industry sectors are employing more workers. Singaporeans are worried that they may not benefit from the new jobs created.

To ensure that Singaporeans take up new job opportunities successfully, we must encourage employers to make longer-term plans to work with the

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Government and the labour movement to invest in training and re-training. This will help more Singaporeans enter new growth sectors or to take up the challenges of new job assignments.

Through the tripartite cooperation, we will be able to help our workers to realise the benefits of the new job creation.

Lastly, I hope that our Government, in the first two years of implementing the Workfare Income Supplement, will adopt a more flexible approach and to give time to low income workers to adjust to getting coverage for themselves and their families under the CPF safety net.

Sir, I support this Budget.

*Cols. 1751-1752.

1.35 pm

Dr Loo Choon Yong (Nominated Member): Mr Speaker, Sir, I rise in support of the Budget Statement delivered by the Second Finance Minister.

I must congratulate the Second Finance Minister for a sound and balanced Budget Statement with adequate contributions from all the right anatomical parts - brain, heart and a little further down. I compliment the courage and candour of the Minister when he said that "in real terms, the lowest 20% of the households has seen their incomes per capita decline from year 2000 to 2005". Actually, a statement like this is definitely political cyanide elsewhere. But this sort of open approach to problem actually defines Singapore.

In true Singapore fashion, having diagnosed the problem and the danger of the bottom 20% being left out of our growth and prosperity, I am very confident that the various measures to be taken by the Government, eg, CPF restructuring and Workfare, will help us bridge the gap.

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Last year, 173,300 new jobs were created and more than half of these jobs were taken up by the local workforce. Sir, there is still considerable concern about whether Singaporeans are getting these jobs. With a population of 72% Singaporeans, 10% permanent residents and 18% non-resident workers, it would be useful for the Minister to provide this House with a breakdown of beneficiaries of these new jobs. Hopefully, Singaporeans will be reassured that they are the main beneficiaries directly and indirectly of new job creation.

Sir, a larger question which we have to decide at some stage is really what is the optimum population Singapore should have. With technological advances, there is much less concern about adequacy of water resources and land for building flats and accommodation. However, with the total fertility rate of only 1.25%, and this rate does not seem to be improving despite all the baby bonus packages and the pro-family 5-day work week, I think we need to rely more on immigration to grow our population. And if we indeed want to grow over time to become a 6.5 million population, then I think we need to take all the steps to ensure proper integration of immigrants and minimise the attendant social costs and disruptions associated with a large immigrant population. I would certainly encourage the Government to conduct open discussions with stakeholder groups in Singapore towards determining this question. I would also point out that size matters, but not all the time, and there are successful economies in Scandinavia with population of somewhere between 5 and 8 million.

Sir, I congratulate the Government on implementing the Post-Secondary Education Account (PSEA). I see this as a small first step towards shifting our social support system from "supply side subsidy" to that of "demand side subsidy". I believe the Government should

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progressively make greater use of market forces and the individual's freedom to choose, as eloquently argued by the late Nobel Laureate Milton Friedman. Perhaps, we may not have to go so far as to use the voucher system. Our account system probably works just as well. I believe that as we gradually move towards subsidising the person who needs a subsidy and less so subsidising the geographies and institutions, I think we will allow market forces to work better.

Government, as regulator and financier or co-financier of services, can ensure adequate competition as well as the availability and adequacy of information for the subsidised person to make informed choices.

Service providers will become more responsive to the needs of people they provide services to. The thousands of decisions, trade-offs, calculations and millions of transactions that take place daily will constantly adjust, review and refine the system. Surely, this would work better than relying on choices, preferences made by civil servants and Ministers notwithstanding their eminence and scholastic achievements. Besides, the Government should be better appreciated for making subsidies available to needy citizens rather than blamed for inadequately responsive social services. Even as I applaud this initiative, I would like the Government to consider extending the PSEA in future years in the following manner.

Annual top-up of PSEA

I would like to see an annual top-up of PSEA and more in time of budget surpluses. This would be a constant reminder to everyone that we, as a society, truly treasure our only resource - our people. In time, it is conceivable that the annual grants to our post-secondary institutions may be reduced as more money is put in the hands of

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students and their parents. MOE's role will have to change progressively to that of regulator, financier, quality monitor and industry promoter.

Amount of top-up inversely related to family income

This will surely ensure that those with smaller family income, the poorer ones, will benefit more. And this is another way for students from poor families to have a chance to move ahead with the rest of Singapore.

Extend the scheme to cover children from birth

Yes, this will mean more money but the earlier coverage will mean that there will be more money in the pot when the child needs it.

Allow parents to make voluntary tax deductible deposits in their children's PSEA

This, together with extending coverage earlier, will encourage parents to save for their children's future education. And having saved some money for the children's future education, we hope they will be more serious about their children's education.

Allow PSEA to be used for all approved educational establishments, Government or private

Sir, I urge PSEA be allowed to be used for approved private educational establishments because this will allow more choices for Singaporeans and encourage more competition amongst educational institutions. The globalised world requires Singaporeans to quickly acquire new skills to seize the opportunities that abound. Our educational system should really be

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extremely mobile and quick footed to respond to the needs of these people.

If PSEA is substantial over time, it will allow to be used for private institutions. I see more private local institutions being spawned and more foreign institutions setting up campuses in Singapore. Singapore's aspiration to become a "Global Schoolhouse" will then be realised.

I am however not supportive of allowing PSEA to be used for education outside Singapore. I believe the present scholarships, student loans and CPF withdrawal policy should suffice.

Transfer balance account to CPF Ordinary Account to be deferred to 40 years instead. With our goal of lifelong learning, extending PSEA to 40 years will enable people to take multiple courses as they reinvent themselves for the rest of their working lives.

Sir, I also like to applaud the Government's support for lifelong learning. This is a necessity for our economy to meet the challenges ahead. I also support greater promotion of this concept by employers, unions and the media for this is also one way to help our older workers adapt and upgrade themselves so that they will continue to be relevant to commerce and industry. People need to realise that, to be successful, they must be able to adapt to rapidly changing workplace, workforce, work nature and work system. We need to "reinvent" ourselves every few years. Otherwise, we will become irrelevant and extinct. The medical profession, as an example, spends the most years training and studying, compared to other professions. Yet, we realise the need to do continuing medical education if we want to keep abreast of changes and developments in our own respective fields. Some of you may not know doctors now need to be re-certified every

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two years in order that they will be able to obtain their practising certificates. So as the Minister said, "We need to encourage every Singaporean to see that lifelong learning is a way of life."

Sir, another important concern I have is regarding our HDB property market. 85% of Singaporeans live in HDB flats and most of them own their flats. HDB housing is one of the cornerstones of our socio-economic success. I believe it is in our long-term interest to ensure that HDB housing serves the social needs of ensuring most Singaporeans can have an affordable roof over their heads, whilst also serving as a long-term investment for retirement. But HDB flats should never be allowed to become instruments for speculation. Those who want to speculate can take the chances with the private market.

But the private market has become more exuberant in recent times. I hope this exuberance is well founded and of the rationale kind. We have been reassured that there is no property bubble waiting to burst.

It is precisely because we are doing well that I would like the Government to re-examine the various CPF and HDB rules and ensure that we shield HDB sector from the forces of greed and speculation.

An examination of property indices showed that between 1st Quarter of 1990 and 4th Quarter of 1996, HDB resale price index rose 400%, which is an average of 57% per year! That kind of number is high by any standard. The corresponding rise in private property index was 300% over the same period, or 43% per annum. When prices of HDB flats grow too fast, owners are understandably happy as they feel richer. However, between 4th Quarter 1996 and 4th Quarter 2003, the HDB index fell 31%. Some HDB owners who bought their flats at the top of the market, or

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near the top of the market, they are still in the negative equity territory. And I do not think it is a nice spot to be in.

I hope we will learn from the past experiences and put in place measures to prevent the HDB sector becoming a vehicle for speculation. Now that the economy is doing well and property and share prices are buoyant, we should have more room to move in this regard.

Finally, I also wish to support the Government's intention to grow Singapore into a philanthropy hub. I support the Minister's intention to do away with the 80:20 rule on spending and liberalising double tax deduction for donations.

The NKF saga shows up clearly the need for greater transparency and better governance for many charities. It is now more difficult to raise funds and to find volunteers to sit on boards of charitable organisations. Many well meaning and compassionate people want to help charitable causes, but they do not wish to be dragged into all kinds of investigations and become responsible for breaches by other less noble people.

Besides the creation of the office of the Commissioner for Charities and other related measures, I would recommend that our universities provide suitable courses for volunteers and directors of charities, VWOs and other non-profit organisations (NPOs).

I believe that, as our society matures, more people will be involved in this sector. I think it would be useful to have courses to train directors of charities, VWOs and NPOs on governance, procurement, fund raising and other best practices, just like the Singapore Institute of Directors holding courses for company directors so that they can do the job more effectively. Management staff of these organisations can undergo appropriate training so that they can manage charities

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and non-profit organisations better. In time, there could even be degree and master programmes for these people. Others from the region can also avail themselves of the requisite training through these courses, not unlike the LKY School of Government helping to train administrators from the region.

Sir, I support the philosophy enunciated and the direction advocated by the Minister in his Budget Statement. I will continue to pay my taxes cheerfully.

1.52 pm

Ms Indranee Rajah (Tanjong Pagar): Mr Speaker, Sir, I rise to speak in support of the motion.

This is an excellent Budget. It is creative and it is innovative. It sets the vision of where we want to be and it outlines the means by which we are to get there. And what is most important about this Budget is that we are to get there together. The different segments of our society all reach a goal that is set out in the vision. And the idea behind this Budget is that no one should be left behind and that is particularly important when you consider the strains that are put on us with globalisation, the stretching out of incomes and the disparity between wages. That is why I am glad that much attention has been paid to levelling up for those who are less fortunate, including Workfare for low-wage workers. I applaud this initiative because it is important to encourage the spirit of self-reliance, independence and resilience of which I will say more later.

But on the issue of Workfare, this helps the older, full-time workers aged above 45 years who earn $1,000 or less as well as those above 35 years who earn $1,500 or less. One point I wanted to make on Workfare was in relation to

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helping the informal workers. The Finance Minister had indicated that we want to encourage informal workers to join the CPF system and to benefit from the Workfare Income Supplement scheme, or WIS. This is a good initiative but there are practical problems in the implementation that will need to be addressed. Many of these are odd job labourers. They do not have formal employment contracts. Some of them do not even deal with the employers directly, especially in the construction industry. They tend to deal with the foreman or the supervisor. There is very little documentary record of their employment. This makes it difficult for them to prove that they are working in order to get any financial assistance that is linked to their efforts at getting work. So steps should be taken to address this so that such low-income workers will be able to benefit from schemes such as the WIS. And steps must also be taken to ensure that employers pay their CPF because, in many instances, such employers try to take advantage of low-income workers like that and not pay CPF.

One other aspect of the Budget which I wish to comment on is the creation of a living environment of the future. The Finance Minister has said that as a global city, we cannot just be an economic marketplace. We must have a living environment that is best in Asia. And with this in mind, we want to create a home where the family feels that they own not just their flat, but also our neighbourhood. So we want to transform our HDB heartlands. MND will undertake a systematic and total urban regeneration, and we will have a network of water bodies to enhance our living environment and bring waterfront living to HDB neighbourhoods. The idea is that we want a first-class residential environment. If we are going to have that, we also need to have first-class social habits which, at the moment, in some HDB estates, we do not have. When I do my walkabouts, one of the most common complaints that I

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encounter is the problem of people urinating in the lifts. I know that we want a network of water bodies and to bring waterfront living to our neighbourhoods, but we do not need to have water works in the lifts as well. This adds to the cost of cleaning up. This adds to the burden of the town councils. It does not enhance our living environment. So if we want to have a really good first-class residential neighbourhood, we will have to develop good first-class social habits.

The second most common complaint that I have is littering from the upper floors. There appears to be very little consideration for those who live on the lower floors. Again, this is something that Singaporeans must understand if we want to have a good living environment. It begins with us. Government provides infrastructure, but each and every individual Singaporean living in the environment has a social responsibility to make the place environmentally clean and pleasant for others.

The other thing I noted about this part of the Budget on creating a good living environment was that there was a lot of focus on the HDB heartlands. I think that more can be done to have a comprehensive and proper programme for improvements for private estates. There seems to be an idea that the people in private estates can take care of themselves, there is less attention paid to the infrastructure for them. However, I think that it is important that those in private estates are not left out. There are things which they need, for example, linkways. They need covered pedestrian overhead bridges, they need various other forms of amenities and infrastructure which they do not have the ability to implement easily. For HDB estates, we have the town councils. The town council does this for the whole HDB estate. But there is no coordinating body for the private estates. And I hope that

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this is something that the Government can look into. Because not everybody in the private estates necessarily drives a car. Many of them take buses; many of them also take the MRT. They too have amenities that they wish to have. So the Government should look into a more formal, structured way of bringing improvements to those who live in private estates. That would be very helpful.

I move now to the other aspect of the Budget Statement, which was building capabilities for the future and investing in our people. In this context, the Finance Minister mentioned the spirit of enterprise, resilience and self-reliance. Whilst this Budget addresses specific needs and specific objectives, such as GST offsets, Workfare, CPF and income tax, I think that one of the most notable things about this Budget is this underlying philosophy which is quintessentially Singaporean: i.e. enterprise, resilience and self-reliance. And the need for these qualities to ensure our progress and our future becomes clear in the light of the recent events which have taken place, for example, the sand ban. Recently, Indonesia banned the export of sand. While the ban applied across the board, Singapore is one of the countries most affected as we purchase large quantities of Indonesian sand for our construction industry. The reason first given by Indonesia for the ban was the general need to protect its environment and maritime borders. Shortly after that, however, the Head of the Indonesian Maritime Security Coordinating Board said that the sand ban was due to Singapore's alleged indecisiveness in resolving border and extradition issues, thereby linking it to the negotiations for the extradition treaty and the border talks between the two countries. This was then followed a short while later by comments from the top Indonesian Foreign Ministry official, the Ministry's Director General for Asia, who was reported in the Jakarta Post as saying that the ban was, and I quote:

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"A key way of placing more pressure on Singapore

to move faster towards signing an extradition treaty and resolving the country's border spats. The ban also aims to push them [i.e., us] to resolve differences in extradition and some border negotiations."

In another report, which made the front page of the Jakarta Post , a member of their parliamentary committee on security and international affairs was reported as saying that the sand ban was not enough to push Singapore to quickly sign the extradition treaty. This was followed by a Straits Times report that reported that, in speaking to Antara News Agency , the Indonesian parliamentary Speaker had said that their government should send back our Ambassador as a sign of protest and that our land reclamation projects would affect Indonesia's maritime borders. So, two points.

As to his first point about sending back our Ambassador, it did occur to me that their government might not necessarily share their Speaker's view because, in the very same edition of the Straits Times on the very same day, there was a rather nice picture of our Ambassador to Indonesia handing over a big box of relief supplies to the Indonesian Minister of Health who received it with a very nice smile. The supplies given by our Ambassador that day were worth 200 million rupiahs. The aid was from the Singapore Embassy in Jakarta, the Singapore Association in Indonesia, and Singapore Telemedia. That picture appeared to be perfectly cordial and it did not seem to me, therefore, that their government had any issue with our Ambassador at all. Or perhaps their Speaker had not seen the photograph?

Their Speaker's next claim was that our reclamation projects could affect Indonesia's maritime borders. The answer to this has helpfully been provided by

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Indonesia's own Foreign Minister. He had said that Singapore's land reclamation efforts would not affect the country's sea border. The Indonesian Foreign Minister was quoted by Reuters as saying that: "It is possible that they [i.e., Singapore] may increase their shore but that does not mean that they move the sea border, as since 1973 we have had an agreement." Basically, the issue is this: the Speaker's assumption is that the borders move when we reclaim land. But in this case, we have got a strict demarcation. So, even if the land is reclaimed, the borders do not move. His [the Foreign Minister's] reply, as I understand it, is also Singapore's position. So it is good to know that their Foreign Ministry and ours share the view that our land reclamation projects will not affect Indonesia's maritime borders. In the same report, their Foreign Minister reiterated that the sand export ban had been prompted by environmental concerns. So, it is now back to environmental reasons.

With all of these somewhat confusing signals, we are not really the wiser as to what the reason for the sand ban is, ie, whether it is for environmental reasons or to pressure us, or both. Hopefully, Indonesia will at some stage clarify which of these it is. It would be helpful for us, and I am sure it would be helpful for them too. In the meantime, though, let us take each reason in turn.

Environmental reasons. We recognise that Indonesia is a sovereign state and if it wishes to ban the export of sand for environmental reasons, then of course it is their prerogative to do so, and we will have to respect that decision. This means that, in the short term, we must look for alternative sources of sand. In the long term, we must find alternative methods of construction that would reduce our dependence on sand.

If the reason is environmental, however, then, on the bright side, it is

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heartening to note Indonesia's concerns about the environment. With the environment being of such great concern, it is hoped that Indonesia will take equally firm and decisive steps to deal with the problem of the haze and the forest fires that cause such devastating deforestation, especially in the light of the anticipated El Nino effect this year. It is also hoped that the ban against forest fires will be enforced by the enforcement agencies with the same zeal and diligence as the sand ban is currently being enforced.

If the objective is pressure, then I venture to say that this is misconceived. We respect Indonesia as a sovereign state and value it as a neighbour. It should not be forgotten, however, that Singapore is a sovereign state too. Under international law, sovereign states have equal standing in their dealings with each other. There should be no place for pressure when sovereign states deal with each other, especially not between friendly neighbouring sovereign states. And if the reason is pressure, then clearly, we cannot accede. The Extradition Treaty negotiations are linked to the Defence Cooperation Treaty negotiations, and, when it comes to something as important as defence cooperation, it cannot be entered into upon anything less than equal standing between two countries, with mutual give and take.

If pressure is the reason, then we will also have to look for alternative sources of supply and alternative methods of construction. So, whichever way we look at it, whether the reason be environmental or pressure, we will still have to look for alternative sources of supply and alternative methods of construction. And that is where the underlying philosophy of this Budget comes in, because, in order to find a way around a problem, we need these qualities. We need the spirit of enterprise, resilience and self-reliance. There will be many times in the future when we will have to deal with the

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vagaries of globalisation, competition, adverse economic conditions, foreign relations or other external factors that impact on us. Having few resources, we will have to be resourceful. Being small, we have to think big. We need all of those things and qualities which this Budget seeks to promote.

With that, Sir, I support the Motion.

2.06 pm

Dr Ahmad Mohd Magad (Pasir Ris-Punggol): Mr Speaker, Sir, at a dialogue session with residents and grassroots leaders I conducted before the unveiling of the Budget, an elderly man stood up and said that he was worried with the rising cost of living after the Government's announcement on the impending GST hike. He was not convinced with the need for the 2% increase at all, especially that things are going well both in Singapore and in the world. I hope the explanation and offset measures in the Budget Statement have helped cast his worries aside, as they seek to help Singaporeans like him cope with the future challenges of globalisation.

Sir, Budget 2007 has been hailed for many reasons. It is a forward-looking Budget, as it seeks to prepare Singaporeans for the challenges of the future. It is inclusive in that there is something for everyone, yet it is focused, as it targets the lower-income sector and gives them the most help. This is a landmark Budget Statement, as it is the first time the Government is giving out permanent assistance to a section of Singaporeans, ie, the lower-income workers. The aim is to provide assistance while spurring them to keep on working and contributing to the economy. For these reasons and more, Sir, I would like to congratulate the Second Minister for Finance, Mr Tharman Shanmugaratnam, for presenting what a local newspaper has

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simply but aptly called it a "Wow" Budget.

Mr Speaker, Sir, this Budget was presented in a year with a positive outlook, both locally and globally. Our economy has done well, and an unprecedented number of new jobs have been created, and the unemployment rate has gone down substantially. But while this is so, we cannot be lulled into a false sense of complacency and assume that the current situation will remain. Globalisation presents many challenges and, if we do not prepare our people, many of them will suffer in the future. In fact, it is precisely because we are enjoying good times now that we should start taking measures to mitigate the effects of future challenges and problems.

Sir, several Members who have spoken before me have already touched on the favourable impact this Budget has on corporate Singapore, and how the financial policies affect Singaporeans. There is, however, one area where this Budget is silent on, and this is on retirement funding.

Sir, this happens to be an area that I am particularly passionate about, considering the Government's position of steering clear of state welfare programmes for retirement. With our population ageing rapidly, we must explore various approaches to ensure that Singaporeans have sufficient funds to carry them through this uncharted phase of their lives. As I have said in my speech last year, the majority of Singaporeans have only their CPF to look up to for their retirement and for whatever little most of them might have when they reach that point in their lives. Even with the one-and-a-half percent restoration, much of it will go towards servicing housing loans. Nothing has been done to the Supplementary Retirement Scheme (SRS),

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which is stifled by its own complex mechanisms and restrictions.

When this matter was raised last year by Miss Penny Low and myself, then-Second Minister for Finance, Mr Raymond Lim, indicated that it would be looked into. A year has since lapsed and we have not heard anything about it. There has been strong advocation to have existing legislation governing tax-approved schemes be widened and made more flexible so as to enhance the appeal to both employers and employees. I would like to reiterate my proposal of last year to have section 5 of the Income Tax Act be reviewed and amended so as to permit companies to establish retirement schemes that will allow employers and/or employees to contribute directly to a retirement savings plan. The US' section 401(K) scheme in the US is a time-tested and mature scheme and could be used as a basis or model for reference. Contributions to such a scheme, in addition to CPF, should be tax-exempt and that the accumulated benefits are portable. I will elaborate more on this during the Committee of Supply debate.

Let me now move on to the Workfare Income Supplement (WIS) scheme.

Sir, the Government is spot on in its approach in giving more help to lower-wage workers. The widening income gap is a global phenomenon, and Singapore is not spared from it too. While the lower-wage workers have benefited from Singapore's overall economic growth and measures have been taken to help them become more skilled, the gap continues to widen as the salary increases for the top-end workers are growing faster. With these challenges, it is unwise for the Government to let this section of the population to continue struggling, as they may get left further behind and an underclass society may develop. The Workfare Income Supplement scheme is an innovative way of helping these

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workers, because it enables them to have a larger take-home pay, have more in their CPF accounts but yet remain employable, as their employers will contribute less to their CPF. But while we want to help these workers, it is essential that we do not blunt their desire to continue working. We must continue to preserve the basic principles of our social security system and encourage our people to become self-reliant.

However, Sir, there remains a concern that a crutch mentality can still develop even though WIS is not a welfare scheme. We must tell our workers that this scheme is to help them temporarily, and the ultimate objective is not just to give them handouts so they can remain in the under $1,500-a-month salary bracket but to assist them until they graduate from this scheme, earn a higher income and become more self-sufficient. This will, hopefully, give workers hope that their own situation will improve with time, effort and the initial boost from the Government.

It is imperative that we do not breed a mindset of dependence, as we do not know what the future holds for Singapore. I am worried that, should a national or global crisis occur, such as a flu pandemic, another SARS outbreak or a severe economic downturn, the proxy that is currently used for WIS may not work. In such an event, jobs may disappear rapidly, causing more Singaporeans to be out of work and in need of real help but yet are unable to qualify for WIS, as they will not be able to contribute to their CPF Medisave accounts.

Another scenario could be that, during a prolonged period of downturn, companies may take severe cost-cutting measures, causing salaries to decrease. This will result in a significant increase in the number of older workers in the salary range below $1,500. This will correspondingly increase the cost of

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supporting WIS at a time when revenue collected from GST dips, as consumer confidence is affected. At a time like this, the Government will have to be more prudent with its reserves but at the same time it cannot abandon its people who may be in need of help more than ever before.

Sir, I would like to suggest that the Government adopt a more open-minded and flexible approach to the WIS scheme, as it may have to revise the salary bracket for people under WIS in the event of a prolonged downturn. The amount of assistance given may also need to be tweaked so that more people can be assisted when times are tough.

Sir, much has been said in the media before and after the Budget Statement about Professionals, Managers, Executives and Technicians (PMETs) who were affected in the last economic downturn. This Budget will give some relief towards this sandwich class through various incentives and offset measures, such as the reduction in road tax, maid levy, service and conservancy charges, as well as rebates in property tax. The GST credits will also help this group of people offset the increase, as many PMETs live in five-room or Executive flats. But many say that not enough is being done for the PMETs. Although the rate of structural unemployment among PMETs was almost halved from 1.3% in June 2004 to 0.7% in June 2006, some still continue to face challenges as they struggle to secure jobs that pay them enough. As a result, many cannot afford their HDB mortgages, as their flats were bought at a high price and can only be sold now by incurring huge losses. Consequently, many are faced with no choice

but to downgrade and they are faced with a dilemma as they are unable to secure bank loans due to payment defaults as well as their lower-income status. As many of those in a quandary are first-time flat buyers, I believe that the HDB should consider

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removing the current policy requirement which states that a second HDB loan is only extendable if a resident upgrades to a bigger flat. HDB should be more nimble and have flexible policies which move with the times so that the people's needs are met.

Sir, the GST offset measures have been greeted positively by Singaporeans. There is something for everyone, and the offset packages will cover between 2 and 17 times the amount they would spend on the extra GST each year, with the lower-income and older citizens benefiting the most. While this is good news, I am concerned that the older, less-educated Singaporeans are confused with the entitlement, especially if this is considered in the context of putting it together with WIAS. It was also mentioned that Singaporeans will have to sign up once to qualify for the GST credits over four years. Sir, this will require an outreach and public education effort to make sure that no one misses out in the GST credits. I would like to urge grassroots and community organisations to be involved in this outreach effort, especially for the lower-income and elderly citizens.

In May 2005, it was reported that over 70,000 people had not indicated if they would like to qualify for CPF top-ups from the Government. These were the same people who did not qualify for the third lot of Economic Restructuring Shares (ERS) given out that year despite efforts by grassroots leaders to visit the homes of those who did not top up their CPF accounts to qualify for the ERS. We do not want needy Singaporeans to slip through the cracks and miss these offsets. There is also a need to remind the needy to try and stretch their dollar and not spend cash in a flash. It must be clearly explained that this is not merely a cash handout, but part of a wider assistance programme including offsetting

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the additional 2% GST. We need to find ways to help them stretch the dollar and, through the outreach effort, citizens should be reminded to be more prudent in spending the cash.

I turn now to employment issues, Sir. The outlook for jobs in Singapore last year was bright with an unprecedented 173,000 jobs created as compared to 113,000 in 2005. While this is reason to cheer, we should not only look at the quantity, but also the quality of the jobs that are created. Although major sectors registered employment growth, many of these jobs are lower-paying ones in the retail, services and manufacturing sectors. Many in the lower-income strata are continuing to have difficulty to make ends meet. Therefore, MOM and WDA must continue to push on training and retraining to equip the low-income with relevant skills and gradually improve their income levels. The key here is to encourage them to keep on going and prepare them adequately for jobs that are in demand in the new economy.

However, there seems to be a gap between what locals say and what employers say. On the one hand, feedback from employers indicate that many are willing to hire Singaporeans over foreign workers, but are put off by the attitudes of locals who are not willing to work longer hours or do shift work, as compared to foreign workers. Residents, on the other hand, say that they have looked for jobs but employers prefer foreign workers.

Sir, something needs to be done to understand this gap and plug it. I wonder if the relatively comfortable conditions in Singapore and our increasing emphasis on work-life balance may have made our younger Singaporeans less willing to work in more physically demanding areas, such as the service industry. My GPC Resource Panel member from Giordano, for example, said that some young

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Singaporeans do not see why they should serve others when they are served by maids at home. Others cannot fold clothes well as they are not used to doing household chores.

What is heartening, however, is that employers generally seem to have good experiences with older workers. MOM's survey found that they have a lower incidence of switching jobs and tend to work longer hours. The same retailer from Giordano said its older workers are able to relate to customers well. There, they are given a choice to work up to a certain time as some have to pick up their children after 7 pm. Those who choose to do so, however, have to forgo some commission as peak hours are after 7 pm. But there is a balance. This is a healthy practice and more companies should offer more flexibility to encourage older workers to work.

At the same time, older workers must manage their expectations. A recent survey by MOM indicated that willingness to accept salary adjustment was a significant factor in the employment of workers aged 60 and above. With jobs that have reduced scope of responsibilities, it is only to be expected that the wages given will be lower than their previous ones they held.

MOM's statistics also indicated that employment rates for older workers have increased. This is indeed good news but, again, most were doing low-level jobs as cleaners, machine operators and sales workers. We must remember that the elderly is a diverse group and not all will be best tapped when they are doing service type jobs. With the impending ageing process of the baby boomers, we will need to widen the scope of jobs. The elderly do not only have to perform service or cleaning jobs as there are many who have served in middle-management posts and have a wealth of skills, knowledge and experience dealing in the

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past. Perhaps, jobs in consultancy or other areas could be explored for the elderly.

Sir, policy changes alone might not be enough to encourage more elderly Singaporeans to work. The tripartite movement between the Government, employers and unions needs to continue to work closely together to boost this silver industry. Since the start of the year, the Manpower Ministry had raised the sub-quota of "S" Pass workers from 5% to 10%. These are mid-level skilled foreign workers who have diploma, university or technical qualifications and can work in the professional, specialist or technician level jobs earning a minimum basic salary of $1,800 a month.

I believe that these are the kinds of jobs we must continue to train and retrain more of our people for. We need to continue matching Singaporeans for jobs at these levels wherever there is an industry need, first, before getting foreigners to fill up the jobs. It is at the lower and higher-ends that we can afford to hire more foreigners if there are Singaporeans not able or not willing to do the jobs.

With Singapore rapidly transiting into a knowledge and technology-driven economy, the top-end is particularly witnessing an increased shortage in talent. As an employer in the high-tech sector, I can certainly vouch for this. Not only am I getting lower and lower responses to job advertisements for key and professional positions, the expected compensation from those who responded has also increased significantly. The employment market has become much more dynamic and many companies are facing increased staff turnover and are struggling to retain their talent pool.

Sir, as we try to get the best from the world to come here, we must not forget that some of our own best talents are also

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venturing out. While some will eventually come back, others may not. We must find ways to retain some of our best talents while we attract more from outside. We must ensure that sufficient opportunities are created for them or face the risk of losing them to foreign competitors. Top talent command global salaries and we must be prepared to match this or lose them.

In this light, Sir, I am also concerned about talent retention in the public sector. Singapore has done well to-date because of a world-class Government and a talented critical mass of public sector employees who have creatively executed the policies of the Government. With so many opportunities currently available here in the region and globally, the pull factor is very strong. I am confident that the Government is aware of this situation but would like to, nevertheless, ask what is being done to retain our key talent pool in the public civil service.

Sir, I move on to population and migration. Last month, Sir, I read an article in the International Herald Tribune about Ireland's population woes. Contrary to the kind of population issues that many developed countries in Europe and the world are facing, the kind of population problems that Ireland faces are not related to that of a population decline or an ageing society, but one of a population boom and an excess of youth. Its birth rate of 15.3 births per 1,000 residents in 2004 was the highest in Europe and it also has reached a high, in terms of immigration, with almost 87,000 migrants in the one year ending April 2006.

With this boom, the Irish are starting to feel the heat. Schools are getting more crowded, infrastructure is strained, there is a mad rush for facilities, including childcare services. One school was said to have run out of space and had to resort

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to even using the basketball court as a classroom. In Dublin, housing prices are doubling and people are starting to feel the strain.

Recently, the Government announced its revised estimates for Singapore's population, from 5.5 million set some six years ago to 6.5 million people. This represents almost a 45% increase from our current population of about 4.5 million. The Government has given its assurance that quality of life will not suffer with this population increase. It has said that with proper planning, Singapore can comfortably accommodate 6.5 million in the future. Some economists have even ventured to say that it is with a population of 8 million that Singapore will have the critical mass it needs.

Sir, if you were to speak to the ordinary Singaporean, you will find that immediate concerns upon hearing this upward revision of population statistics would be overcrowding. With planning and proper use, we can maximise the use of our land and space in Singapore. But with such limited land, surely something has got to give. One only needs to visualise the cramped apartments in Hong Kong, the crowded streets in Chennai and the high property prices in central London in order to get a sense of what it is like living in an overcrowded city. While these people can choose to move to lesser populated areas, we, in Singapore, have no such option. Our Forum pages have carried letters from Singaporeans on overcrowded trains and buses at peak hours, congested roads and long queues for facilities. HDB flats may get smaller and this may become yet another factor for Singaporean couples not to have more children. If so, this can impact on our national policies aimed at population creation.

Some economists have said that a large population mass is not necessarily a

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key ingredient for a nation's success. Finland, with a population of over five million people, is one of Europe's most prosperous countries and the birth place of globally successful companies like Nokia.

With our current total fertility rate of 1.25 children per resident female in Singapore, it is safe to assume that a large part of this increased projection will include foreigners. It will be beneficial if the Government will clarify to Singaporeans its rationale behind this upward revision of population rates. Is there really a need for 6.5 million people or more?

At the end of the day, the question to ask is: is this trade-off worth it? Having a large population may spur economic growth but at what price? The last thing we want is for our population and immigration policies to work well but at the expense of our own people. While we want to create buzz and spur economic growth, we must make sure that such efforts will not drive our people out in search of less crowded living areas or a more tolerable pace of life.

Sir, I was watching the programme "Building the Biggest: Underground Singapore" on the Discovery Channel last Sunday when memories of the Nicoll Highway collapse in 2004 came vividly to my mind. This accident, coupled with the accidents at the Fusionpolis Complex and Keppel Shipyard, collectively claimed a total of 13 lives. While even such painful memories fade with the passing of time, I hope that the lessons that we have learnt from such accidents will behove us to continually enhance the workplace safety and health framework to minimise and prevent loss of lives. To this end, I am glad that MOM has made a commitment to revamp the occupational safety and health framework by way of passing legislation in January last year that heralds three fundamental reforms to

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improve safety outcomes. This includes expectations by employers to reduce risk at source, take ownership of OSH standards and introduce measures that would bring about a cultural change for life and livelihoods at the workplace, and holding persons accountable for their actions, including imposition of higher penalties for poor safety management.

Sir, the Workplace Safety and Health Act came into operation on 1st March 2006 and replaced the Factories Act as the key piece of legislation regulating occupational safety and health at the workplace. With the projected economic expansion, our workforce will most certainly experience strong growth in the next few years. We cannot afford to see our economic growth marred by unfortunate accidents in workplaces, especially accidents that result in fatalities. It is therefore imperative for not just the Government but all stakeholders, including employers and workers, to continue to support Singapore's efforts to make our workplaces safer and healthier. While the new Act currently covers only the riskiest workplaces, such as factories, construction worksites and shipyards, efforts must be put in place by employers in the less risky workplaces to ensure that good measures are in place for the safety of their workers.

Sir, MOM announced that the scope of the Act would be gradually extended to all workplaces in phases over the next few years. In order for industry to have sufficient time to prepare to meet the requirements under the Act, could the Ministry provide more details of the plans as to which new workplaces will be covered by the Act and timeframe for the extension of the Act? I would like to also ask the Minister for Manpower for an update on the progress made so far in improving workplace safety and health performance. What percentage of workplaces has already attended the requisite training courses on risk

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assessment, and how many have now instituted risk assessments at their workplaces? Has the Ministry held accountable and taken action against individuals who failed in their responsibilities under the new legislation? Finally, has there been any significant improvement in safety outcomes since the new legislation has been in place?

Sir, I would like to continue the rest of my speech in Malay.

Mr Speaker: Dr Ahmad, you only have two minutes left.

Dr Ahmad Mohd Magad: ( In Malay ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, I am confident that the Malay community welcomes the various incentives that have been announced recently in the Budget Statement which is inclusive and at the same time gives special attention to the low income earners. It is intended to prepare Singapore and its people in facing various challenges which will be brought on by globalisation. Therefore, it is imperative that the Malay community seizes all available opportunities, especially schemes and incentives offered by the Government. Among those which have been announced recently is the Workfare Income Supplement scheme or WIS which will benefit many low income earners from the Malay community. Such a scheme is far better than welfare schemes because WIS encourages our people to continue working and not be dependent on Government’s assistance. This endeavouring attitude for wanting to be self-reliant is very important for the Malay community. If one is retrenched, he or she should not lose hope, instead he or she must strive to find another job. If there are jobs which require one to work on shifts or offer a lower pay, whether in the cleaning or service sector, the Malay community must seize these opportunities

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while undergoing training, job enhancement or waiting for better job opportunities. This is better than being unemployed for months. I also hope that the community in general will not have a crutch mentality or frequently be reliant on Government’s assistance. Every low income earner has to see WIS as an assistance. With this, I support the Budget Statement.

*Cols 1753-1754.

2.36 pm

Mdm Cynthia Phua (Aljunied): Mr Speaker, Sir, I join the chorus of hon. Members in congratulating the Second Finance Minister for presenting a Budget which brings about many structural changes in the way we manage our fiscal policies which will go a long way in reinforcing and strengthening our economic and social structure. As the Prime Minister had promised before the Budget was unveiled, even with an upward revision in GST, the Government has put in place many measures to cushion the impact of these taxes and protect the interests of the individuals and households across society.

The concerns of the lower income have been allayed with a long list of pay-outs and top-ups that are lined up to benefit them directly, not to mention the indirect benefits for them through schemes such as top-ups for post-secondary education, public transport fund and funding for self-help groups and voluntary welfare organisations. The middle income, or the sandwich group, is also taken care of, as they too will benefit through reduction in maid levy, road tax and the slew of benefits like property tax rebates and bonuses for the elderly, the national servicemen and GST credits. Thus, in every family and every household, they will enjoy multiple benefits.

Through a clever adjustment of CPF policies, companies are incentivised to

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offer jobs to older workers and, at the same time, lower-wage workers are able to take home more pay with the Workfare Income Supplement running alongside. But in case anyone gets the idea that our Government is softening its stance on welfarism, the answer is "No". Instead, what it has done is to reinforce its current policy to encourage our residents to work and to save for the family and future. With this commitment, the Government would assist to put more into their savings and reinforce the family's ability to meet the demands of the future. This reinforcement of work is timely, as we are seeing some disturbing trend at the meet-the-people sessions where some residents readily asked for cash supplement outright. However, when asked to fill in the application forms, many refused to put in their real financial situation and supporting documents, and this resulted in a lot of our Community Development Councils' rejections. Often, grassroots leaders would turn around and say that this same person who was given some cash last week was seen carrying many more plastic bags of groceries than the grassroots leaders themselves in the run-up to the Lunar New Year. This is where I feel the grassroots, social and community organisations in the community will have to pay closer scrutiny to those who come to them to seek assistance. Grassroots leaders will have to be properly equipped with the skills to differentiate the true hardship cases from the opportunists.

Education

Talking about the needy brings me to my next topic - education. I am very pleased that we are enhancing subsidies for KiFAS, childcare and top-up for Post-Secondary Education Account. Education is the way out for those who are in the lower-income group. I think the Government should give more financial support for the needy students who are in secondary school as well.

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Let me explain. Tuition fees are very high now and can cost more than $200 a month easily. While there are self-help groups like Mendaki, CDAC and other institutions running tuition classes, many students still have to go to private schools where some of these subjects are not taught. I know that the teaching methods are better and they can get better results. I do not know if there is anything wrong with our schools' programme which result in our students becoming dependent on tuition classes. In fact, tuition has become such a thriving business in Singapore that it has become a multi-million dollar industry. So those who can afford to pay high fees get the better tutors and better results. And students from needy families who cannot afford expensive tuition have to fend for themselves. Ironically, these are the children who need help most. We can often see these secondary school students performing odd jobs here and there instead of spending time with their school books. One of the reasons for this is that some of them have to help out to supplement their family income or pay for their own tuition fees or their own school pocket expenses and lifestyles. In this cycle, if they cannot cope with their studies, they will just give up their studies and then drop out. I hope the Ministry could extend the post-secondary top-up to include the upper secondary school students, and look into the increasing need of tuition classes to pass examinations. Also, are our schools teaching and guiding the students enough?

Impact of new Concept Plan on economy

One other issue I want to raise relates to the employment of our financial resources to deliver our plan to turn our country into "An Endearing Home" and "A Distinctive Global City" and its impact on our society. Occasionally, we hear gripes about how foreigners are said to be better

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off than Singaporeans. In fact, a Sunday Times' survey in January 2007 found that 65% of respondents believe foreigners enjoy all the privileges of living in Singapore, but none of the responsibilities. Worse, 43% believe that the Government cares more about foreign talent than Singaporeans. This, of course, is not true as borne out by Budget 2007 and other Government policies.

But let us look quickly at this Concept Plan, which maps out the vision for Singapore for the next 40-50 years in terms of strategic directions for land use and transportation. It was reviewed in 2001 applying a long-term population parameter of 5.5 million as a basis for land use and transportation. At that time, our population was 3.9 million. This time, at a recent mid-term review by the Ministry of National Development, URA and various Government agencies, the Concept Plan, taking into account recent population trends and the strong economic prospects in future, revised the long-term population parameter to 6.5 million people. Today, our population is close to 4.5 million. I know that this is not a target population figure but a parameter used for strategic planning purposes. However, with this new parameter, it will invariably impact on the land use and land prices. There will be competing demands between land use for social, business and infrastructure projects, and this will cause a rise in the price of land. Eventually, the Gordion impact will be felt across the whole economy.

My other point is that unless our Treasury is able to take counter balancing measures, we are going to see some great impact on capital expenditure. Each Government Ministry will come knocking on the door of the Finance Ministry to ask for a higher budget for development projects.

Invariably, not all the cost will

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be absorbed by the Government, but the public will have to shoulder a part of the higher cost, and this possibly through higher taxes again. So, I hope the Finance Ministry did participate in the discussion before the parameter used in the Concept Pan was reviewed and look into ways to mitigate the would-be increase of the limited land prices.

Social impact on Singapore society

Next, with the parameter earmarked at 6.5 million people, what is the impact on our society? Given our low fertility rate, obviously foreigners are the ones who will be filling the vacuum. This means we will have to continue to attract foreigners to churn our economic growth engines. The arguments for this policy are good. We do not have the people and the talents, so we attract them to come and work and live here. Just as we do not have the natural resources, so we import them, like our sand. I hope our financial planners in their pursuit of growing the wealth and prosperity for our nation also take a multi-disciplinary approach and think about the social and political implications on the fabric of our society. I know I am not alone in raising this concern. I note that a post-65er journalist in the Straits Times wrote a column on this issue and in some way pre-empted my thoughts. Before I proceed, I must stress that I am not against foreigners working here. I welcome them. I know many of them and it is good that we have them on our shores. But what I am concerned is how will the presence of large numbers of foreigners, with different cultural practices, values and upbringing, impact on our people and our cultural values. I am a very grassroots person. I work the ground and I listen to the people. As it is, I hear people talking about: "Do you realise that the Kwan Imm Temple is now beginning to be overwhelmed by Chinese nationals? Soon it will no longer be a gathering point for Singaporean worshippers." Now this is an innocent

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remark, but it says a lot about what is happening around us as well as the inner feelings of the people who are used to niche areas where they are so used to call their own.

Gearing up IRCC - Inter-racial and Religious Confidence Circle

In our society, we have always been brought up with the principle of multi-racialism, that is, Chinese, Malay, Indian and others. A time will come when the "Others" will have to take a new addition and call it "Others plus plus". There will then come a time when our understanding of multi-racialism is put to a test. Our IRCC will not be equipped to manage the "Others plus plus" factor. We need to gear up our IRCC or similar groups to face these new challenges. In fact, Prof. Joel Cohen, the visiting American population expert raised the question when he was invited to speak at the Lee Kuan Yew School of Public Policy. He had asked how would Singaporeans react and what would be the effect on the multi-racial fabric of our society. Do we have the answers?

Demands on public service

Then not only one Ministry, for example, MCYS, but many Government Ministries may find themselves being put to the test. They may, for example, need to put up international signs at their public service areas to guide these foreigners, like airports do. I understand at least one private hospital has subscribed to CableVision Arab Service, and employed interpreters because they are getting an influx of people from there. Therefore, we need to also gear up all our public services from schools to Government hospitals and polyclinics to cope with perhaps an expected rise in full-fee paying students and non-subsidised patients and so forth. And I worry for the 200,000 housewives and 400,000 people under 20 who are not covered by MediShield, as

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disclosed by the Health Minister, if the medical cost escalates.

Private or public?

Already, our sometimes over-taxed hospitals are now setting up "private clinics" to get a share of medical tourism and turning Singapore into a medical hub. How will this tap on the strained resources that we currently have to serve Singaporeans? Is this in line with the Finance Ministry's guidelines on public service for Singaporeans? What criteria will they use to justify these "private" businesses which are run on the premises of public buildings? So, what is next? Privatisation? No, this does not always work, as we can see in the case of our transport services. I know we should not let these concerns turn us into a community of analogue citizens living in a digital age. By all means, let us get ready for the future and for globalisation. However, it will do well for the architects of these policies to carefully check the foundations and the load factors before we start laying the bricks one on top of the other and fundamentally check if we even have enough bricks for these developments.

At this juncture, Mr Speaker, Sir, I will address my next concern in Mandarin.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, Budget 2007 has been generous and has Singaporeans at heart. Although the GST rate will be increased by two percentage points, Singaporeans will be compensated with a substantial offset package. This will help to reduce the impact of the GST increase. It is important that we look after the weaker group and make sure that they do not fall behind. I am grateful that the Government does its best to look after all Singaporeans. But what is more touching is the measure to encourage family

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cohesion as well as to look after the elderly citizens and their family problems. As the Prime Minister said in his New Year message, we have to promote and enhance family cohesion to establish a strong family bonding. The mutual support given will have a positive impact on the whole society. We encourage families to live together with their parents, so that the children can look after their parents. Whatever happens, they must understand that the incentives given by the Government for taking care of the elderly are only an encouragement. Looking after our parents is the responsibility of every family. Let me reiterate this point. Looking after our elderly parents is the responsibility of each and every one of us.

When I meet the people, there are always some senior citizens appealing for my help to apply for rental flats. This is so because they feel that their children, their daughters-in-law and their sons-in-law do not wish to live with them. It saddens me to see this. I have lost sleep over these families. We would like to encourage all children to look after their parents and live together with their parents. When they were young, the parents looked after them, and have everything to give. But now our parents are old, it is our turn to repay their loving kindness, and to look after them so that they can enjoy a good time in old age. Also, there is greater warmth in the family. Therefore, it is important that we have pro-family measures in place, to be filial to our parents and to respect our parents, so that from generation to generation, our future offspring and our children in future generations will bear this sense of gratitude.

In this light, I hope that the Ministry of Community Development, Youth and Sports will adopt more policies to further encourage pro-family ideology. These concepts will then become part of our

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lives, and we can integrate this knowledge and apply them in the society.

Last but not least, we hope to see this tradition being passed down from generation to generation. Hence, we must take care of our parents so that they will enjoy quality life in old age. We hope that life will be more meaningful to them, and there will be love, dynamism and unity in our society.

*Cols. 1755-1756.

2.58 pm

Mr Low Thia Khiang (Hougang): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, the salient feature of the Budget this year is to consolidate our social cohesion and to strengthen our social safety net. The Workfare Income Supplement Scheme (WIS) will be another pillar in our social safety net. Last year, during the debate on the President's Address, I pointed out that with the restructuring of our economy and the changes in our economy, many people are worried about the new economic model. Although the economy grew, life was not easy, income did not increase and the cost of living continued to go up. If the people continue to live in such conditions, the values of the people and their attitudes will be changed and social cohesion will be put to a test. Even with economic growth, people will lose confidence in the country. It is for this reason that I support the new pillar for our social safety net. I believe that the WIS, being a permanent scheme, and not only when the Government has a surplus or to give away just before the General Election, is given on the basis of income and economic needs to help the lower-income group, and being structured as a pillar of our social safety net, should be able to mitigate the problem of income gap and the difficulty of the lower-income group to meet the cost of living brought about by globalisation and the changes in the economy.

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I noted that in implementing the Workfare Income Supplement Scheme, the Government has the intention to net in the lower-income group who are eligible for the scheme to become participants of the retirement, Medisave and MediShield scheme through the CPF system. Thus, the WIS basically operates like the CPF top-up scheme. For example, the lower-income group must first top up their CPF or contribute to Medisave before they can receive the Workfare Income Supplement (WIS). The pay out of the WIS will also be largely in the form of CPF. To the low-income earner, cash is the most practical help. To expect those who are doing odd jobs, with an irregular income to maintain a CPF contribution before they can enjoy the WIS is less attractive. It seems that the the Government is lacking the sincerity. Although I understand that it will take time for the scheme to work and for the Government to assess its operation and effect, I do hope that the Government will review the scheme in due course and, in particular, consider having a higher cash component of the WIS for those who are doing odd jobs with an irregular income.

This WIS is estimated to require a yearly expenditure of $400 million and, at the same time, the Government has also announced an increase of GST by 2%. I do believe that the Government is able to finance the Workfare Income Supplement Scheme, without even increasing GST. To help the poor and to have additional revenue to help the lower-income group has become a splendid reason to justify the GST. The Government is merely using this as a convenient excuse to increase the GST. Another reason given is to increase our competitiveness so that more companies will set up their presence in Singapore and hence the need to reduce corporate tax thereby resulting in lesser revenue for the Government. Will a reduction in the corporate tax lead to an increase in revenue? We do not know. As

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the Minister pointed out, in the next five to 10 years, the economic outlook is good and has never been better. With better performance of the economy, the corporate tax will inevitably increase. As such, why is there a need to increase the GST? On 26th February, the Straits Times quoted an economist saying that companies, in deciding where to establish their location, will look at a number of different factors and not just the corporate tax rate. Other observers say that Hong Kong has the advantage of not having GST, especially so for the retail industry. Therefore, it is inconclusive that this move will give us the definite economic advantage. This is especially so when we are emphasising a shift towards the services industry. Let us not forget that the retail sector is an important partner in promoting tourism. Of course, the Government will have all kinds of reasons to persuade the people to accept GST, or even to say that the GST is beneficial to the people. I am not convinced and, in this regard, let me tell the House the following facts that I know.

Firstly, although there is a deficit of $700 million in this year's budget, we do not need to use the past reserves. Since May last year, the Government has already accumulated over $700 million surplus over just a period of eight months.

Secondly, if the Government does not increase GST, there is no need for the Government to provide an offset package to the poor and the expenditure of which then becomes another reason for increasing the GST.

Thirdly, there had been schemes of the rebates and the distribution of such Progress Package in which the benefit was tilted towards the lower-income group. The budget before the last General Election was a good example. Even then, when the Budget had a large deficit, there was no need to increase GST and

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neither did the Government have to make use of past reserves.

Fourthly, in the Budget this year, the Government has drawn up a list of all the expenses and it has tried to show the people that these are large expenditures. But over the next few years, whether the Government will reduce subsidy to public services for reason of the need to find more resources and to reduce expenditure, and therefore people be asked to bear a greater portion of this cost, it is still unknown.

Fifthly, when the casinos start operating, there will be an endless and constant stream of income for the Government. As such, why is there a hurry to increase GST? After the General Election in 2006, when the PAP Government has received the mandate of the people, the first step it has taken is to hurriedly increase the GST with the grand signboard announcing to help the lower income group. It seems to me that the Government is fleecing the people.

*Cols. 1757-1760.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.20 pm.

_Sitting accordingly suspended
at 2.58 pm until 3.20 pm. _

Sitting resumed at 3.20 pm

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[Mr Speaker in the Chair]:

ANNUAL BUDGET STATEMENT: Debate resumed.

Mr Hri Kumar: Mr Speaker, I rise to commend what is undoubtedly a comprehensive and forward-thinking

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Budget. The plans and investments announced will keep our economic engine running and create wealth and opportunities for all Singaporeans. My colleagues in the House have commented on them and I will not repeat the points they have made. I share in the enthusiasm for the future.

I would however like to make a number of points about what Mr Low Thia Khiang has said. He, I am glad to say, acknowledges the significant change the Workfare is going to make to our welfare philosophy. And, in fact, he is pushing for it to be permanent. On any view, this will cause a significant increase in spending. But he does not want us to increase GST. So how do we pay for this increased spending? He gives very few details.

In fact, Mr Speaker, Sir, a major argument he makes is that the casino which will come in 2009 will bring big money and, therefore, we should wait for it. I think Mr Low is getting a headstart because he is really gambling on our future. Of course, we all hope that the casino will generate revenue for us and, if it does, I am sure the Government will share the wealth with Singaporeans, just as it had done many times in the past. In the meantime, let us not base our fiscal policy on speculative future income.

Mr Low then says that a corporate tax reduction is not sufficient to attract business. I agree that if that is all we are relying on, then that is not a good thing. But we are not relying solely on the corporate tax reduction. There is a whole slew of packages and measures and which is why we need to invest in our infrastructure, which is why we need to invest in our people and upgrade their skills so that we can attract businesses to come to Singapore. So he ignores all the other measures and just focuses on one. And all these investments require money.

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So he comes to his third point which is, "Right, let's not increase the GST now. Let's wait because we are doing so well, we must be earning money. Let's wait till later." In other words, let us wait when the Singapore economy is not doing so well, then increase taxes. It is completely logical. We should have a prudent fiscal policy. When times are good, let us raise the funds we know we need to make sure Singapore takes the next step forward.

Mr Speaker, Sir, there will also be Singaporeans who are dissatisfied with the Budget because they have received fewer benefits compared to others. But the reality is that it is impossible to give everyone everything he wants and still be fiscally prudent. Nor is it sensible to give everyone the same benefits. I believe many Singaporeans support the principle that more help should be given to those who need it more, for example, low-wage earners, senior citizens and, on the corporate front, our local SMEs who need a boost to remain competitive in the face of global competition. All I wish to add is that I hope that those who administer the scheme will be given the flexibility to ensure that Singaporeans who genuinely need help will not fall through the cracks. Even if those dissatisfied remain unconvinced, we should nonetheless move forward with the knowledge that we have done the right thing. We have never shied away from making tough and difficult decisions, and doing the right things has been the hallmark of this Government and those before it.

And doing the right things is what I would like to talk about today. In considering the Budget, I was reminded of a television advertisement a few years back - I am sure Members of this House will remember it - it showed Singapore actor, Lim Kay Thong, stepping off a train in a foreign country and a porter asked him where he was from, and he replied that he came from a country known for chilli crab. A reporter then asked, "Are

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you from Chile?" And the joke was that nobody in the rest of the world knew much about our island. That has since stayed in my mind because it addressed an issue which has always concerned me, and that is our national identity.

When asked about Singapore, the rest of the world often cites our clean streets, efficient transport, airconditioned malls, cheap and good food. Our best known icon is the Singapore Girl, hopefully. We are consistently ranked as a great place to do business. These are important, but is this really how we want to keep being identified? What is going to make our children and future generations proud to be Singaporeans? Do we have something more to offer the world beyond sarong kebayas and cheap and tasty food? I believe we do, and I hope the future Budgets will reflect this.

Any Budget is about choice. It is about the efficient allocation of limited resources.

How a country allocates those resources necessarily reflects its values. In a very real sense, the Budget is nothing less than an unambiguous declaration to the world stating in numerical terms what we as a nation regard as important and what kind of people we are or want to be.

For example, by providing now Workfare, the Budget sends a message that, while the state will help the disadvantaged level up, the onus remains firmly on individuals to work and improve their lives through their own efforts. Our work ethic is what makes Singapore successful, and I hope Workfare will not change that. In particular, it should not encourage lower-paid Singaporeans to allow their skills and earning power to remain stagnant in the belief that they will continue to receive top-ups from the Government. I therefore hope that the Government will marry Workfare with an effective skills retraining programme to give recipients the opportunity to step up on their own, and to review the position

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of those who refuse to do so for no good reason.

But I would like to see Singapore send other positive messages, and one of the messages we should send is that we are a responsible global citizen as well. One way we can do this, and I believe Ms Jessica Tan has alluded to this, is to become a shining example to the world in the way we deal with the environment.

For many years, Singapore has been environment-conscious. Long before it became fashionable, our country paid attention to saving water and water recycling. We introduced a campaign to encourage tree-planting and set aside land for parks and nature reserves. Now, our goal is not to become just a Garden City but a City within a Garden. We were the original green party. These initiatives were born largely out of necessity. As a small young city, we knew the importance of creating a sustainable environment to live and work in and to attract investments and tourism. That is even more true today. Just as our island cannot escape the effects of globalisation, neither can we avoid that of global warming and other environmental hazards.

Today, the world is just waking up to the realisation of the damage being done by mankind to the Earth. There needs to be an urgent and radical change to the way we live, if we want to preserve the planet for our children and for future generations. We can build as many iconic landmarks as we want, but it only takes a choking haze to remind us about our vulnerabilities.

In keeping with that, we should send the message that Singaporeans care for the world we live in and will do our bit to keep it safe for our children. Although we are small - indeed, because we are small - we should place great value on

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preserving our environment, and there are several ways to do this in the context of the Budget and I will just give a few examples.

(1) We should give more and larger tax breaks or other incentives to companies which adopt green practices or which are engaged in research or businesses which help the environment. We should make it more attractive for Singaporeans and businesses in Singapore to purchase hybrid or other green vehicles. This should include altering our tax structure to make such cars cheaper and/or make environmentally-unfriendly cars more expensive. Today, despite the green rebate, a hybrid car is still far more expensive than an equivalent petrol car, in some cases, about 20%-30% more expensive. That makes it very difficult for most Singaporeans to even consider them.

(2) All public transport should use clean energy without having to pass the extra cost on to commuters. Recently, Mr Speaker, Sir, one of the taxi companies announced that they were going to purchase vehicles which are environmentally-friendly but at the cost of a higher flag-down rate for consumers. That is not a good move, because we are equating good environmental practices with higher cost. We should also invest in infrastructure to make owning such vehicles more feasible, for example, by having a wider network of refuelling stations for CNG vehicles.

(3) We need to invest in educating Singaporeans to instil good environmental habits, and this includes habits such as recycling. One of my town councillors lived in Japan for a few years and he says that the culture where he was living was such that, in sub-zero temperatures, even when he was feeling unwell, he would bundle up, walk seven blocks down, just to deposit his trash in the recycling bins. The recycling habit is so ingrained where

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he lived that any contrary behaviour was frowned upon and simply deemed unacceptable. In Singapore, we pay lip service to recycling. We should drive the message home about its importance, especially in schools and with our children.

Mr Speaker, Sir, what I am speaking about are not luxuries. These are imperatives for our survival. There will also be all manner of tangible benefits. Any measure which makes us less reliant on oil must be a good thing. We will also need to use our resources more carefully, bearing in mind that we are now looking towards increasing our population to 6.5 million. Major MNCs are now becoming more environmentally-conscious and are more likely to invest in a country which shares their same values and beliefs. It will also be difficult for others to criticise and accuse us of being environmentally irresponsible.

Mr Speaker, Sir, Singapore is special. More than any other place in the world, if we truly believe in something, we have the infrastructure and the people who can make it work. There are many governments which shy away from doing the right thing because they fear of losing power. It has always been our philosophy that the better argument must always prevail and there is no good argument against educating Singaporeans and encouraging them to be environmentally responsible. What a wonderful opportunity we have today. Because of the sweat of the previous generations, this generation has the economic and political stability to take Singapore to the next level and we must not dither. We must become a First-World country in every sense of the word - economy, infrastructure and values.

I am confident that we can be a shining red dot not just in the region but in the world, an example to the world of the great things that can be achieved

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when there is real goal to do the right thing and, when Singapore is mentioned, it will not be just for food and cleanliness but of a country others aspire to emulate and of a people proud to be Singaporean. And the next time I step off a train in a foreign country, I would love it, if people saw my Singapore passport and, instead of asking, told me that they know of Singapore because it is a model for the rest of the world.

With that, I support the Budget.

3.37 pm

Dr Lim Wee Kiak (Sembawang): Mr Speaker, Sir, the Second Minister for Finance, Mr Tharman Shamugaratnam, has indeed unveiled a Budget for all Singaporeans that is pro-business, pro-growth and focuses on building up the foundation for the future of our nation.

Sembawang Town is a fairly new town. It is up in the north where there is a lot of greenery and my residents are mainly very young. There are a lot of young couples and there is also a very good tradition whereby the folks there like to stay in the same area. A lot of them come from the Yishun and Mandai area, so big families stay together. The most common complaint I have about this Budget now is that they hope that they see the other three Ps, ie, for it to be pro-natal, pro-family as well as pro-environment.

When I was driving through Mandai Road, I always think that it is a great place for the Marathon. The Marathon is, to be exact, 42.195 kilometres. I think a few Members in this House have actually run the Marathon and are quite familiar with it. At the start of the marathon, usually all the participants group together. They start off as a huge group. But as the race goes on, at the 10-kilometre mark, at the half-marathon mark, the group will get further and further apart.

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So, the distance between the first group of runners and the last group will actually get longer and longer. This year, we are progressing into our 42nd year as a nation. So we are running the first part of our marathon. It is like running the 42nd kilometre of the marathon. And now, at this part, we realise that there is a group of participants that is way ahead and there is a group that is way behind.

I think the introduction of the fourth pillar for our social security net through the Workfare plan represents a paradigm shift and it has added a new dimension to the Government’s efforts to help the lower-income workers. It is indeed a welcome move, akin to providing roller-skates as well as in-line skates to the group that is behind. They have to move on by their own effort. But we are not providing them with a travelator or a motorised vehicle to transport them along. So, by their own effort, we hope that, with the new roller-skates as well as in-line skates, the fourth pillar, they will be able to catch up with the group in front and narrow the gap.

The second part I would like to touch on is education. It is heartening to see the Government giving an additional boost to help the lower-income sector now through education and training. By providing education for children of the lower-income group, we will be able to help them to secure a berth in better-paying jobs when they grow up. Good education is like spiked shoes worn by mountain-climbers and equipment given to them as they inched their way up to the top of the mountain. These are essential equipment they need. The top-up for the post-secondary education account is a step in the right direction. It encourages the poor to pursue beyond what we call foundational education to post-secondary education and to get themselves a diploma, even a degree. It encourages

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the poor to help themselves. And many may not realise it that, with the continual threat to social security, education is one of the key elements to prevent a catastrophe in today’s modern society. English novelist HG Wells was disillusioned by what he saw in Russia in 1920 and he published a book called “The Outline of History”, and how true were his words when he said: “Human history becomes more and more a race between education and catastrophe.” The main theme of his book was that the world would be saved not by revolution but by education.

Thus, I have three comments mainly on this Budget. The first is on pro-natal and pro-family, ie, promotion of the family unit. Second is the group that is frequently ignored, ie, the stay-at-home spouse whom I would call stay-at-home mums and stay-at-home dad. Third is our environment.

I was flying back from Tokyo last week and I watched a very interesting documentary on the Galapagos Island. It is a group of islands that is sited just off the Andes in South America and this group of islands is unique in terms of its fauna as well as the animals and birds. The islands were formed by volcanic actions. What is interesting is that it actually feeds off the cold stream from the Antartica as well as the warm stream coming up from the Equator. Every year, the birds on the island itself will reproduce themselves. The fertility of those birds actually depends on the condition, ie, the climate as well as the amount of fishes that are in those waters. About four to seven years, there will be a cycle of El Nino effect. When El Nino comes in, the cold stream fails to flow to Galapagos Island. As a result, the fish stock will decline, the birds will starve but automatically they actually cut down their fertility rates. So, fertility is a combination of correct inducement, in incentives in terms of providing them the

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fish as well as how the climate changes. When I watched this video, I was thinking about how we did with our population and, in this particular Budget, it seems that we did not mention anything about population, anything about policies that encourage our local population in replacing themselves. I hope the Government has not given up hope on Singaporeans as it gears towards putting our focus on getting in migrations of foreign talents.

Mr Speaker, Sir, I would like to speak in Mandarin for the next section of my speech.

( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, Sir, I think it is perhaps right to raise this point at this time of the lunar calendar and we talk about the importance of the family unit, since this is the time of the year that the Chinese will be visiting their relatives and hosting reunion dinners to renew ties among their kins. I think it is not too appropriate for Mr Low Thia Khiang to say that the Government is treating the people as its antagonist. He should instead wish everyone a Happy New Year.

I am sure most of us are aware of this Chinese idiom “ xia zi mo xiang ”, ie, a blind person touching an elephant. Mr Low could be touching the rear or the elephant trunk; as such he is not looking at this Budget objectively. Sir, I believe this Budget is like the Dragon in the Chinese mythology. You will see the Dragon head but you cannot see the Dragon tail. It is only when you look closely, then you will see the Dragon soaring up into the sky.

This is the time of the year that the Chinese will be visiting their relatives and hosting reunion dinners to renew ties among their kins. The Prime Minister, in his Lunar New Year message, spoke of

*Cols. 1761-1764.

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the need to encourage family responsibility and to maintain a healthy, cohesive family unit as it would provide a strong base and a balance between work and family life. I cannot but agree with the Prime Minister on the importance of the family unit. There is evidence to support the point that many delinquents and drop-outs are often the fallout from homes with a fragmented family unit. There are many studies that show that the intimate nature of primary relationships, families have significant impact on their children.

While I do not encourage the Government to play nanny, I would think that it would be appropriate for the Government to consider the introduction of more programmes to encourage the growth and nurturing of strong family units. This could be done by further enhancing the current tax scheme for maintenance of aged parents. The Government could also consider special bonus schemes for aged parents who live with their grandchildren.

On this topic of children, I would ask the Government to take a cue from France which experienced a growth in its fertility rate after the government implemented a slew of pro-family measures. These include a payout of US$960 to mothers who take one year unpaid leave from work after the birth of a third child. Large families also get shopping discounts and reduced fares on public transport. French fathers are also guaranteed paid paternity leave. Most of the subsidies are income-based, thus giving low-income families the most assistance.

According to a report in the Washington Post, while birth rates are threatening to undermine economies and social stability across much of an ageing Europe, French fertility rates have gone up. France now has the second highest fertility rate in Europe, 1.94 children born per woman, exceeded slightly by Ireland

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at 1.99. The US fertility rate is 2.0 children.

On a lighter note, I am reminded of a recent New Paper report on 21st February of a photograph showing a young couple smooching, of all places, on a park bench at a Senior Citizens’ Corner at Bukit Batok. But in many European countries, according to the Washington Post , their park benches are filled with elderly residents. By contrast, in France, the parks are overflowed with boisterous children, making it an international model for countries struggling with the threat of zero population growth. Last year, officials from Japan, Thailand and Germany have reportedly travelled to France to study its reproductive secrets.

While I do not expect the Government, certainly not our transport officials, to reduce transport fares, I hope we can look at implementing similar measures using France as an example and review areas that we can fine-tune our policies. For instance, the subsidy under the Kindergarten Financial Assistance Scheme has been increased to 90% for the lower-income families but there is no assistance provided to the middle income group. Perhaps the subsidy, but a lesser amount, could be extended to families of the middle income group. This would lighten the financial burden on parents with kindergarten-going children. It would also ensure that the children get a chance to participate in a proper pre-school programme which, according to studies by the RAND Corporation, has proven benefits. The child would benefit in academic achievement, behaviour, educational progression and attainment, and even in the prevention of delinquency and crime. Here, the PAP Foundation has done a commendable job of upgrading its teaching methods and its facilities without a corresponding rise in fees. In fact, some have maintained their fees, some raised it

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marginally, and a few even lowered their fees.

The cost of bringing up a child in today’s context is one area where the Government should study carefully and review the tax relief for children. The current tax relief has not kept pace with the rise in the cost of living. Similarly, I hope the Government will increase the tax relief for children supporting their elderly parents. I hope a review will be carried out sooner than later, as part of our pro-family policy.

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

Rewarding the stay-at-home spouses

There is one job in Singapore that does not pay CPF, does not pay Medisave, and there is no leave, no public holidays and no medical leave entitlement. It is not entitled for Workfare bonus as well as wage supplements. This is the job description of the stay-at-home spouse. I would avoid the word, just using "mums", because there are some "dads" that stay at home as well. They play a crucial role in supporting the family but their contributions are not well recognised and appreciated. These individuals are an integral part of the family unit as they are responsible for the family’s well-being. They are akin to the supporting players in a marathon - they provide the water, they provide the direction, they help to give you the sponges when you are tired and support you through the race. Their task is not an easy one. They perform selflessly in their roles - of course, they do complain sometimes. I think most of us realise their importance in maintaining the family. As such, they should reap some rewards along with the working-class.

Perhaps one way we can do this is to provide tax rebates for the working

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spouse that transfers part of their CPF funds from the Ordinary Account to the Special Account of these spouses to provide them with at least some retirement funds who are home managers. Another form of reward for these home managers that can be considered are incentives, which is not dissimilar to the ones provided to NSmen as a form of recognition for their service to the nation. It is an apt provision, given that non-working spouses perform a key role in the family unit, just as our NSmen perform a key role in protecting the sovereignty of our country. So the $100 that you provide will not make them rich but, at least, it is a form of recognition.

Environment

It has been dwelt on a lot in the Forum pages over the last few days, as well as by my former parliamentary colleagues here. The Budget did not dwell much on environment. Singapore needs to contribute to the world effort to restore and maintain nature’s equilibrium. Many of us have borne testament to the sheer might of the forces of nature last December in 2006 when Singapore experienced the wettest month in the last 30 years. We witnessed the flash floods and the resulting damage that was caused by the event. Such storms, as we have seen in the US, will only increase as there is a real danger of an environmental crisis evolving, due to the recent phenomenon of global warming.

I read with interest in the media recently on Australia’s move to ban filament bulbs. It is a move in the right direction and I applaud the Australian government for their bold initiative. Our fiscal policies do not do enough to reflect our determination to defend and fight the degeneration of the environment. We have already fired the first salvo with our signing of the Kyoto Protocol of the UN Framework Convention on Climate Change (UNFCC) in April last year. Keep

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in mind, however, we should not get over our heads just by signing this particular Convention. As the saying goes, we cannot run before we learn how to walk. Therefore, we should start by instituting small measures in our policies, and focus on issues with larger scope later.

Albeit the best thing that we can do now is to increase the rebates for the purchase of environmentally-friendly cars, which will help to keep prices competitive so as to increase the take-up rates, I mirror my colleague's point earlier on regarding the tax incentives and tax rebates to be given to such vehicles. Likewise, that will cut down our pollution as well. We should likewise provide incentives for petrol companies to introduce bio-diesel as a form of alternative fuel as well as for operators who convert their fleets to run on bio-diesel. This is only just the beginning. But it will send a very strong signal as to our resolve as well as demonstrate a sound example of our aspiration to become a global bio-diesel hub.

But all said, I can only pray that our neighbours will also play their part during the dry months when El-Nino decides to visit Singapore instead of Galapagos by taking a commitment not to scorch their land at the expense of choking the entire region with haze. I hope that empty rhetoric will this year give way to substantive action so that a meaningful relationship can be developed within the framework of ASEAN regional cooperation.

In conclusion, this Budget is a bold step forward. It affirms the Government’s commitment to keep Singapore competitive and ready for the exciting opportunities that await us for the next 42 years, the next marathon, as we continue our marathon from the lower segment to the higher segment of the first-world economies as envisioned by Minister Mentor, Mr Lee Kuan Yew.

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With that, I support the motion.

3.57 pm

Dr Lam Pin Min (Ang Mo Kio): Mr Speaker, Sir, like many of the hon. Members of this Chamber, I would like to applaud the Second Finance Minister for the very comprehensive and all-encompassing Budget - one that looks after Singaporeans from all strata and walks of life, but not forgetting to ensure Singapore's economic growth and prosperity by investing in the future.

I am delighted to note that the Government is placing a lot of emphasis in preparing for the future healthcare needs of Singaporeans. This is in anticipation of the rising healthcare expenditure as a result of the ageing population, medical advances and the changing disease patterns from infectious diseases in the 1960s to chronic diseases, such as stroke, diabetes and hypertension, which require long-term medical care.

The healthcare services in Singapore have a reputation of being world-class, reliable and efficient. The combination of excellent healthcare infrastructure, availability of skilled medical professionals and the latest medical technology has made Singapore the convincing healthcare services hub in the region. Singapore's goal is to become Asia's premier healthcare hub through the attraction of foreign patients, ie, medical tourism.

The term "medical tourism" I believe, is no longer unfamiliar to most. The term has risen from the rapid growth of an industry where people from all around the world are travelling to other countries to obtain medical, dental and surgical care while, at the same time, their family members or the patients themselves may engage in sightseeing, vacationing and fully experiencing the attractions of the countries that they are visiting.

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Medical tourism has, in recent years especially, risen to become a new revolution to the economies of many countries. A combination of many factors has led to this recent increase in the popularity of medical travel - the high cost of healthcare in many industrialised nations, the ease and affordability of international travel, and the improvement of technology and standards of care in many countries in the world. A great enticement to medical travel is also the convenience of obtaining prompt medical attention in comparison to that of the home countries. For example, the time spent waiting for a procedure, such as a hip replacement, can be a year or more in Britain and Canada. However, in Singapore, Bangkok or India, a patient could possibly have an operation the day after his arrival.

Sir, currently, together with countries in the region like India, Thailand, Hong Kong and Israel, Singapore is one of the most popular world-wide destinations for medical travel. Similarly, countries such as Argentina, Bolivia, Brazil, Costa Rica, Mexico and Turkey are well patronised for their cosmetic surgical care. As a leading healthcare services hub in the region, Singapore has positioned herself as a medical hub where healthcare services, medicine, biomedical research and pharmaceutical manufacturing converge.

The successful separation of the 10-month-old Nepalese conjoined twins in 2001 had elevated our medical expertise on to the world's headlines, and we have since accomplished many more milestones both in Asia and in the world arena. Our recent hosting of the first Medical Travel Conference from 12th to 15th December 2006 also attracted participants and media from 21 countries, setting the pace and platform for the development of the budding medical travel industry. Being a part of the medical fraternity, I am proud and honoured to note that Singapore had made international news for many

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complex surgeries in specialities such as ophthalmology, neurology, oncology and organ transplants procedures. Our healthcare services, coupled with advanced research and development, are built on a heritage of excellent quality, safety and trustworthiness.

Currently, Singapore boasts the largest number of US Joint Commission International (JCI)-accredited hospitals in the region. Quality of medical care is ensured through accreditation from the JCI, the global arm of the institution that accredits most United States' hospitals. In time, we may look towards other European or Asian-based systems of hospital accreditation in an attempt to broaden our credibility and appeal.

With the emerging popularity of medical tourism worldwide, I think it is important that we recognise the impact that this industry has on our economy. Most of the travelling patients come from the regional countries such as Indonesia, Malaysia, Vietnam and Brunei. In addition, we are also witnessing healthy growth in patient numbers from South Asia and the Middle East. On top of that, patients from developed countries, such as the United States, also choose Singapore as their medical travel destination for relatively affordable quality healthcare services in a safe and clean cosmopolitan city for peace of mind. In Asia alone, it is estimated that there are 1.3 million medical tourists a year compared to 160 million international journeys. This means medical tourism makes up less than 1% of the Asian travel market.

According to a recent report by Singapore-based travel, supplier and ticketing firm, Abacus International, the growth potential for medical tourism is somewhere between 20% and 30% over the next few years, and Asia's medical tourism industry is expected to generate

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more than US$4.4 billion by 2012. In Singapore alone, 374,000 visitors came here solely to seek medical treatment in 2005. The estimated average expenditure of a medical tourist is about US$362 a day, which is more than double an average tourist spending of US$144.

Singapore aims to attract one million medical tourists by 2012, making it a US$1.6 billion market annually. With patients travelling with families, not only for the medical industry, the economic spin-offs for the overall tourism industry are set to grow as well.

Besides Singapore, many Asian countries, such as India and Thailand, have risen to become popular destinations for medical tourists. India is a relatively newcomer to medical tourism but it is quickly catching up with Thailand. Recent estimates indicate that the number of foreign patients there is growing by 30% each year. India has top-notch centres for open heart surgery, paediatric heart surgery, hip and knee replacement and areas of advanced medicine in which India is generally considered a global leader. Estimates of the value of medical tourism in India will reach as high as US$2 billion a year by 2012. India's medical industry's main appeal is the low-cost treatment. Most estimates claim that treatment cost in India starts at around a tenth of the price of a comparable treatment in America or in Britain. For example, in April, Madras Medical Mission, a Chennai-based hospital, successfully conducted a complex heart operation on an 87-year old American patient at a reported cost of just a mere US$8,000, including the cost of his airfare and a month's stay in a hospital. The patient claimed that a less complex operation in America had earlier cost him US$40,000.

Following closely behind Singapore, India has six hospitals in the JCI

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accreditation list. However, the biggest obstacle preventing the rapid growth of India as a healthcare destination is its relatively poorer infrastructure and the lack of quality hotels.

Medical tourism is also a rapidly growing segment of Thailand's tourism and healthcare industry. Lower labour costs translate into significant cost savings on procedures, compared to hospitals in the United States and other western countries. In 2005, one Bangkok hospital took in 150,000 treatment seekers from abroad. In 2006, medical tourism was projected to earn the country 36.4 billion Bahts. There is no better exemplar of the trend than Bangkok's Brumrungrad International, which looks more like a high-end hotel than a state-of-the-art hospital. In addition to having a Starbucks, a McDonalds and on-site valet parking, Brumrungrad also provides a visa extension centre, a team of well-trained interpreters to help with language problems, and 123 hotel-like rooms and suites where patients can recuperate after medical treatment.

Today, many Thai physicians hold US professional certification. A number of Thai hospitals have relationships with facilities in the United States. The US consular information gives the Thai healthcare system high marks for quality, particularly facilities in Bangkok. Unlike India, Thailand has modern infrastructure with clean and safe streets.

Regardless of its growing popularity, medical tourism has its limitations. In places like the United States where most have insurance and access to quality healthcare, modern tourism is viewed as risky. In some parts of the world, wider political issues can influence where medical tourists will choose to seek out healthcare. For example, in late 2006, some patients from the Middle East were

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choosing to travel to Singapore or Hong Kong for healthcare rather than to the United States. A stable and secure Singapore will therefore serve as an additional plus point where patients want peace of mind and have to decide between our competitors and us.

The common limitations to medical tourism include the following. Government and basic medical insurance and sometimes extended medical insurance often does not pay for medical procedures overseas - meaning the patient has to pay cash upfront. There is usually little follow-up care. The patient is usually in the hospital for only a few days and then goes on a vacation portion of the trip or returns home. Complications, side effects and post-operative care become the responsibility of the medical care system in a patient's home country.

There are growing accusations that profitable private sector medical tourism is drawing medical resources and personnel away from the local population. However, some analysts argue that the biggest beneficiaries would be the domestic patients, as the cutting-edge medical technology needed to lure medical tourists and the international accreditors do prescribe detailed parameters and quality standards, benchmark and compliance norms, ensuring good standard quality for all patients. However, with an additional one million medical tourists expected in the next five years, more resources, such as medical manpower and additional infrastructure, should be built in order to cater to the increased demand anticipated.

Sir, in order to promote Singapore as a leading destination for medical tourists, we need to assure our world-wide medical travellers that we are able to counter such limitations as well as provide quality medical care and services over and above what our competing countries, such as

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India and Thailand, can provide. While India and Thailand boast about their low-cost medical care and services to attract medical tourists, we need to relook at our cost competitiveness in order to lure medical tourists to our shores. It may not be feasible to compete dollar for dollar. Rather, we should position ourselves as being able to provide sophisticated and safe medical care, which is value for money. We must capitalise on our excellent pool of medical expertise and continue to attract the growing numbers of international professionals to Singapore for training, learning, sharing and networking. Investments in this area would help to ensure that our medical professionals stay at the forefront of the healthcare developments.

There is also a need to carve out special niche areas to better compete with our regional competitors. Our centres of excellence, such as the Singapore National Eye Centre, the National Neuroscience Institute, the National Heart Centre and the National Cancer Centre, offer complex quarternary care in the fields of ophthalmology, neurology, cardiology and oncology respectively. Aggressive marketing strategies should be undertaken to promote the availability of these very specialised medical capabilities in our centres of excellence. In addition, these centres should continue to engage in R&D, leveraging on the growing biomedical research in Singapore to develop new state-of-the-art medical treatments.

We should continue to engage in clinical research with the many pharmaceutical, biotechnology and medical technology companies, so that Singapore can remain cutting-edge in its healthcare services delivery. With world-class research capabilities in genomics, molecular biology, bio-engineering, nanotechnology and bio-informatics in place, we are in a good state to embark

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on translational research, thereby extending our capabilities from basic research to clinical trials and, eventually, valuable outcomes at the clinical level. This would be one way of keeping Singapore's competitive edge and to enable our healthcare professionals to provide the latest innovative treatments and therapies, enhancing Singapore's reputation as the leading hub for healthcare in Asia.

As the term illustrates itself, medical tourists naturally need medical tour guides or ambassadors. Extending our services beyond medical care will naturally attract more foreign patients to Singapore. Besides quality medical services and relatively low cost compared to their home countries, foreign patients from the Middle East and other non-English speaking countries will expect to understand and be understood when they visit Singapore for both medical and vacation purposes. Although there are currently international patient service centres set up by many healthcare establishments exclusively to serve the needs of international patients, we will need to strengthen on personalised services, such as going the extra mile to learn their languages, cultures and behaviours. While most post-treatment rehabilitation and follow-up is one main concern to medical tourists, countries like Costa Rica offer residential and recuperative facilities dedicated solely to medical tourists at affordable rates. For example, according to its website, Villa Plenitude is a dedicated post-operative recuperation facility comprising 10 luxury rooms, all equipped with private bathrooms, cable television, telephone, a spa with Turkish baths, massage, aroma and physiotherapy spa, facials and beauty treatments, pool and Jacuzzi. Imagine, all these at the rate of US$100 for a standard package and US$150 for a deluxe package, which also includes dedicated professional post-operative care by trained nurses.

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How are we compared to our competitors in the area of hospitality services? In order to compete regionally and globally, we need to constantly improve our services. Often-times, this requires thinking out of the box to give the oomph factor. As mentioned by Minister Tharman in his Budget Statement, the world is coming to Singapore. We are not just attracting more large investments and MNCs to Singapore. Our world-class healthcare services are also attracting many foreigners here to seek medical treatment. Globalisation is indeed working to our advantage and we must seize this opportunity to market ourselves and compete with the players from the region.

And I hope to believe that our original objective of attracting one million medical tourists by 2012 is a conservative estimate. Sir, on that note, I support the motion.

4.15 pm

The Senior Parliamentary Secretary to the Minister for the Environment and Water Resources (Dr Amy Khor Lean Suan): Mr Speaker, Sir, by most accounts, this year's Budget is a generous one. Arguably too generous. Which government in the world would provide a GST offset package of up to 19 years? Does the Government have to go this far?

Contributors to REACH generally found it to be a “receptive” and “good and well-intentioned” Budget. It showed that the Government has listened compassionately and that concrete steps have been aken to address Singaporeans' concerns of the widening income gap and the rise in the cost of living. Indeed, to quote the gleeful boss of an SME, he said: "It’s a budget made in heaven!"

Many of the measures in this Budget, such as the two percentage point

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reduction in the corporate tax rate and other tax exemptions and rebates, are bold and designed to enhance Singapore’s long-term competitiveness in the global economy. But, Sir, what is sorely missed this year is a widely anticipated cut in personal income tax. As the corporate tax rate is now lower than the top personal income tax bracket of 20%, there may be some incentives for sole proprietorships and partnerships to incorporate their businesses to avoid paying higher personal taxes.

Whilst only about 40% of the resident population pay income tax, a reduction in personal income tax rate would be welcome by the tax-paying middle income segment, many of whom lament that they contribute substantially to the state coffers and yet always seem to get the least benefits from any “hongbao” Budget.

Making the personal income tax rate even more competitive would also be an added attraction to draw high net worth foreign talent to Singapore. They are just as important to attract companies to locate here. In the same vein, many also feel that it is about time for us to see - pardon the pun - death of the death duty, which can deter wealthy foreigners from relocating and keeping their wealth here.

Aside from some of these unfulfilled wishes, there have been dissenting voices, including an audio clip by Mr Brown – he of the bak chor mee fame - of the GST increase cast in the form of a Valentine love story, which, to me at least, comes across as neither humorous nor constructive.

I now wish to highlight a number of challenges under the four headings where attention is warranted. Let me call them the 4 Bs.

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The first B: Beyond Workfare

Mr Speaker, Sir, a key plank of this year’s Budget is making the Workfare Income Supplement (WIS) scheme a permanent feature of Singapore’s Budget framework. Coupling Workfare together with a restructuring of the CPF for low-wage workers, makes Singapore’s wage supplementation scheme unique. It provides the Government with the flexibility to channel more of the income augmentation under WIS to CPF as a form of compulsory long-term savings for the low-wage worker, and yet allows him to have a higher take-home pay.

Nonetheless, Workfare, which has been implemented in the US and in the UK for many years, works well in a tight labour market, since it will be easier for the unemployed to get jobs. However, in a downturn, the less educated and skilled are likely to be retrenched first, and would also have greater difficulty securing a job. There could then be pressure for the Government to create jobs for this group so that they can get back on the Workfare scheme.

In the US, for instance, many on the workfare scheme are found to be in non-productive, community service work which were probably created to get these people off welfare and into workfare. There could also be a moral hazard issue as some workers might have no incentive to upgrade since they can continue to get wage supplement, as indeed has been the experience in some countries.

Workfare thus cannot be seen as the panacea for the problems of the low-income workers. At best, it can only be an interim measure. The long-term solution must be to upgrade the skills of these workers and educate their young so that they can get better-paying jobs, get out

,: and stay out of the poverty trap.

Sir, whilst WIS may have become a permanent fixture of our social safety net,

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those who are on workfare should be given as much help as possible to transcend the scheme and not themselves become a permanent fixture of the scheme. For the estimated 100,000 casual workers without CPF accounts, all of the Workfare Income Supplements they are entitled to, if they contribute to Medisave, will be paid into their Medisave accounts. The aim is to get these workers to join the CPF network and save for their future needs. However, some of these casual workers, who earn very low incomes and are already cash-strapped, may not join the scheme as this means forgoing the already precious little they have. Their immediate needs overshadow any lofty talk of long term-savings.

Hence, the Government should monitor the response of this segment closely and assess if the proportion that opts out is significant. If so, the Government could perhaps consider giving a small part of the Workfare in cash to offset part or the entire amount they have to put into Medisave to qualify for the scheme. As the incentive of the WIS to the casual worker is not immediately tangible, there is clearly a need to convince casual workers to get on the scheme.

The second B: Barriers to Employment

It is also commendable that the Government, through this Budget, will be allocating more training funds directly to workers instead of through employers to allow them to upgrade their skills. This would make training and skills upgrading portable, and help to mitigate the problem of older workers being overlooked for training opportunities as against their younger colleagues. Nonetheless, such measures are insufficient if there are still employers and employees who are resistant to change. For instance, as Labour Movement Minister Lim Swee Say has noted, we need to change the cheap source mentality of many customers and

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employers to a best source mentality. As an example, some cleaning contractors bid for jobs at very low rates and, hence, can only pay very low salaries of about $500 for each cleaner in order to maintain their profit margin. With such pay, it would be very difficult to motivate our local workers to take on such jobs. One wonders if this is why there is an insatiable demand for foreign workers who have much lower expectations. Even if they managed to hire local workers, these workers may not be motivated to give of their best and job retention is likely to suffer. It is a vicious cycle. To break this cycle, besides enforcement and whistle blowing, the clients of these contractors themselves should also not possess this cheapest source mindset. The tenders should not be awarded solely based on price, but also on past performance and some minimum standards. The Government, as a major outsourcing client using the tender system, should take the lead in this respect.

Furthermore, we also need to get rid of any biases against older workers. In fact, the plight of the older workers may be even harder to tackle than that of the lower-income group. It is estimated that as at the end of last year more than 8,000 or 2.5% of all PMETs aged 40 to 55 are still jobless. A recent MOM study on the profile of older workers in Singapore also revealed that only 10% of those working as professionals or associate professionals and technicians were aged 50 and over. One suspects that the perception of a middle income squeeze has persisted due to the fact that many who are middle-income and middle-aged worry that they may lose their job anytime and would have difficulty getting another job that affords them a comparable standard of living.

This is a real problem as the next wave of globalisation could render many

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jobs, which are currently held by the middle income, obsolete. Hence, with each restructuring and retrenchment recycle, more PMETs may find themselves redundant. We need to change the attitudes of employers to see them as a ready pool of employees with a wealth of experience to tap on, instead of seeing them as people who may lack energy and are difficult to retrain. Drawing on this pool of older workers could also help reduce our dependency on foreign labour. MOM could, for instance, incentivise employers to hire older workers, and employers who do not discriminate against age should be held up as role models.

At the same time, many of these older workers would also need to have realistic expectations and be willing to take on new jobs. For instance, in the South West CDC, we encounter many mature job seekers who do not feel confident to take on jobs which are different from what they were used to in the past.

Let me highlight another problem. MOM’s recent study on older workers has found that with the strong economic growth and tight labour market, the employment of older workers aged 55 years and above has increased in 2006. However, whilst the employment rates for men aged 55-59 years and 60-64 years are higher than those of the OECD countries, the corresponding rates for the women are significantly lower at 42.9% and 25.2% compared to 51.7% and 30.3% respectively for the OECD countries. Moreover, most of the rise in employment rates appeared to have taken place last year and more than two thirds (68%) of the older workers are employed in lower-skilled jobs such as cleaners and labourers. These clearly show that there remains significant room to enhance the employment of older workers, both in terms of employment rate and better pay, and especially among the women. These objectives should be vigorously pursued.

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The third B: Beyond Foreign Talent - Babies still wanted

In the global race for capital and talent, it is not enough to have a good economic infrastructure. A first-rate living environment is equally important. However, this requires more than the hardware which Singapore has excelled in and will no doubt continue to do so. It also requires first-rate software - a driven committed people in-built with social responsibility, civic consciousness, graciousness - to give the city its vibrancy, soul and spirit. Hence, the need for us to be inclusive.

In line with this vision of a first-world top-rate city, MND recently announced plans to cater for a population of up to 6.5 million from the current 4.5 million. This will provide the human capital without which the vision cannot be realised. However, accommodating such a population could raise a host of issues, such as environmental sustainability which my colleague has already referred to, and threats to our social stability. In fact, it is the latter that is potentially the most troublesome. Whilst we clearly want to attract talent from all over the world, how will having an even more diverse population affect our social fabric? Could the presence of a large pool of a younger, hungrier and more educated foreign population cause Singaporeans to be more resentful and lead to greater social divide? Hence, even as we continue to welcome foreign talents, we must look at ways to help them integrate into our local population, whilst assuring Singapore citizens that citizenship does have its privileges and that every Singaporean matters.

At the same time, we should also continue to promote our marriage and procreation policies. As one feedback participant highlighted, a noticeable absence in this year’s Budget is the lack

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of any incentives to further push along the procreation policy. We need to review our procreation package that was launched in 2004. The package could have averted a further decline in birth rates as the number of babies born last year increased marginally by 557. However, we need to evaluate the impact of the various measures under the package to see how to improve its effectiveness.

Other barriers to procreation need fresh attention. At my dialogue sessions with women groups, the subject of women facing the difficulty of juggling multiple roles inevitably crops up. The same complaints surface - insufficient infant care and child care facilities, especially near their workplaces, and the hefty costs of such facilities even with Government subsidies. So more subsidies are welcome. Some also feel that there are simply not enough part-time work or flexi-work arrangements available for women to have children and to remain in the workforce. In 2006, part-time employment, as a proportion of total employment, stood at only 6.3%, which is less than one quarter of the rate found in countries like Japan and the UK.

Having part-time and flexi-work more widely available will make it easier for couples, and in particular the women, to come to a decision to start a family or have more children. We should redouble our efforts to encourage companies and organisations to provide for part-time and family-friendly flexi-work arrangements, starting with the Government organisations. Many have also consistently noted that some employers still discriminate against pregnant women. The number of pregnant women employees seeking redress through MOM for unfair dismissal has been on the rise - from 36 in 2004, to 71 in 2006. In 90% of these cases, where the worker pursued her claim, MOM investigations “substantiated

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the complainant, who received redress.” This is evidence that such unfair practices still exist, albeit in small numbers. Such discriminatory practices clearly undermine the morale of female employees and work against our social objective of promoting procreation. More can and should be done to protect the rights of pregnant employees, such as a tightening of the existing legislation.

Another step that could be taken to alleviate the problem of discrimination against pregnant employees would be to provide for some paternity leave. For instance, as has been suggested, allow couples the option of taking the last four weeks of the maternity leave either as maternity or paternity leave so that this is not seen purely as a liability against women employees. Moreover, this also sends a strong signal that looking after children is a shared responsibility, thus making the environment more amenable for women to have children.

Many stay-at-home-mums - and I only need to say it is only stay-at-home-mums in this instance to my colleague Dr Lim Wee Kiak who is not in the House at the moment - are the ones that have consistently lamented to me that they are left out of benefits such as the Workfare bonus and subsidies targeted at working mothers, just because they have chosen to look after their children full-time. In fact, this is among the top feedback received by REACH during its pre-Budget wish list feedback exercise. A s tay-at-home-mum does not have regular working hours, annual leave or even allowance bonuses from the husband. Maybe some do! Hence, I feel that it is important to recognise the efforts and contribution of SAHMs and this, I submit, would also include the few enlightened stay-at-home-dads, just to be gender neutral. I would thus like to urge the Government to consider giving SAHMs a bonus, similar to

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the Senior Citizens' bonus and NSmen bonus, from time to time.

The fourth B: Buffer for Budgetary Demands

To entrench Singapore's global competitiveness, strengthen its economic resilience as well as its social fabric, the Government would have to continue to invest heavily - in education, R&D, job creation and offset packages - to deal with the persistent and widening income gap. The demands on Government revenue are thus likely to increase. Hence, a greater need to draw more on investment income from accumulated reserves to make up for any shortfall.

PM Lee had, during the Opening of Parliament, highlighted this and noted that the definition of Net Investment Income contribution would be broadened to include realised capital gains as part of the total returns earned from the investment of reserves. This has been welcomed by tax consultants and analysts as it would come closer to international accounting standards and also because capital gains are a crucial part of the total returns on investments. However, depending on what investment is taken into account in the new definition, one downside would be greater volatility of our budgetary income.

I would thus like to ask the Minister to give us a better idea of the types of investments from which the capital gains would likely be taken into account in the new definition. Too much reliance on NIIC for our budgetary requirements against a higher risk profile of our investments - most clearly demonstrated by the troubled Shin transaction - could mean that we may have difficulties implementing long-term policies through our budgets. What would be the other implications of a more volatile budgetary income and would this mean that we could see GST being raised again in the not too distant future?

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Conclusion

Sir, in conclusion, this Budget has given confidence to many Singaporeans of a very able Government with a sound head, clear vision, functioning ears and a good heart.

Sir, this is the year of the "golden" pig. In the Chinese Almanac, such a year occurs only once in every 60 years! I would like to think that, with the budgetary measures we have put in place to ensure Singapore's long-term prosperity, we should see the "golden" preface to the coming years of the Chinese calendar occurring much more frequently. And, hopefully, we will also be getting “hongbao” Budgets more frequently.

Sir, I support the Budget.

4.32 pm

Mr Ong Ah Heng (Nee Soon Central): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Mr Speaker, first of all, I must applaud our Government for unveiling a Budget that has various components helping the low-income group. It shows that our Government really listens to the voices of its people and adopts concrete steps to help our people. The implementation of the Workfare policy is our cornerstone. The purpose is to help those who want to be self-reliant and willing to work. The Workfare policy will become a long-term policy to help our low-wage workers. We must try our best to help the low-wage workers, especially those elderly workers. We need to help them stay employed.

Mr Ong Ah Heng (Nee Soon Central):

4.37 pm

I have received feedback and some said that whenever we talk about helping

*Cols. 1765-1768

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the elderly workers, we always ask them to become cleaners or lowly paid workers. I hope our Government will allocate more resources to study and to redesign jobs that are suitable for our elderly workers. The NTUC, employers and Government must come together and formulate a win-win employment agreement. For the retirees or the elderly who are near retirement, the Government can help them to be re-employed. Most of these people are staying in HDB flats. These are the important people whom we should help.

No matter how hard we try to help those people who have no CPF to be qualified for Workfare, some of these people still fail to register. As such, they are not eligible for such incentive bonus. Last year, there were about 40,000 people who did not register by the due date. Therefore, they lost the opportunity to receive such financial incentives. On the other hand, even among those people who got the Workfare Bonus, more than 100,000 people did not pay CPF. Of course, this is not a problem that is easily solved. We need to have mutual understanding between the employers and employees.

Mr Deputy Speaker, we often hear debates over outsourcing or cost-cutting measures. This outsourcing has now become low cost sourcing, or cheap sourcing, ie, to hire the cheaper workers. Once we have this low cost or cheap sourcing, salaries and wages of our elderly workers will become lower and lower. What we should encourage is not the cheap sourcing but a brilliant quality sourcing, that means, we must allocate resources based on performance, and not necessarily giving the project to the contractor who has the lowest bidding price. In this regard, I would like to urge our Government Ministries to take the lead in this, and set a good example.

When we evaluate the performance of our civil servants, we should evaluate

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them based on their capabilities and performance, and not how much savings the organisation can achieve through cheap sourcing. Therefore, they should evaluate the tenders based on quality, and they should be rewarded if they achieve this premium quality sourcing.

Mr Deputy Speaker, when I read the newspaper recently, we have been highly ranked by a political and economic risk consulting company in Hong Kong. They said this, "We have a good Government, which is the PAP Government. Our Government implements an effective system and policy." When we face the challenges of globalisation and terrorism, we continue to maintain our stability and prosperity in our society. So within our country, I want to urge our people that when they are unhappy, they can make some noises, they can let out their emotions, that is totally all right. That is acceptable. But after that, they must still remain cool and calm and ask themselves, "What has the Government done for us? What have I done for myself?"

To assist Singaporeans who have difficulties making ends meet, we have the Workfare and Medisave schemes, a two-pronged policy and, on top of that, we have the GST subsidy, elderly bonus, utilities rebates, conservancy rebates and even education account top-up, etc. If some Singaporeans still have financial difficulties, then within our constituency, we also have the ComCare Fund to help them. We still have a lot of funds to help them. To speak simply, they must first try their best to help themselves, before others can help them. If they continue to idle in the coffeeshop every day, then other people will not know how to help them. Therefore, I think they should not complain about their life. So long as they are willing to work, there are always some helping hands around.

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Mr Deputy Speaker, we are in the ocean of “politics of jealousy”. It is always stormy. Even our people can see from the media that there are negative press reports from time to time. Under such an environment, our people must not only care for themselves and their families, but they must also care for the survival of their country. We must encourage ourselves all the time and remind ourselves that only if the people are dedicated and committed, wise and far-sighted, gracious and broad hearted, then we can safeguard and protect our little red dot.

Mr Deputy Speaker, this August is our country’s 42nd anniversary. For the past 41 years, the PAP Government has been leading our people, weathered stormy periods, and this little red dot is still standing tall in the world arena. We have been highly regarded by the world, and a foreign friend told me, "20 years from now on, Singapore will still be governed by the PAP.” I asked him, "Why are you so sure?" He said that he cared so much about Singapore. Singapore is a small country and so many people. Only the PAP Government can get the best talents to join the Government team.

Mr Deputy Speaker, I really admire the will of my foreign friend. Of course, he makes some people uneasy. Maybe the Workers' Party’s Chairman may not be happy to hear that. If you ask me, the next 20 years should not be a problem.

Mr Deputy Speaker, Sir, I support Budget 2007.

4.45 pm

Mdm Ho Geok Choo (West Coast): Mr Deputy Speaker, Sir, this is a win-win-win Budget in that there is something for everyone through the four taps - the CPF, Workfare, GST offset package, and the corporate tax. It is also a Budget that

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paves the way for a more secure future for all of us. Allow me to comment briefly on a few of these four taps.

CPF

CPF, regarded as a linchpin of our social security system, has now become more strategic. It is used not only as a platform to deliver the "goodies". The CPF has also become a mechanism for the Government to drive expected outcomes, increasing take-home pay of the lower-income and employability of the older workforce. Given the Government's push for employment of the older workforce in the wake of an increasingly tight labour market in these better times, one other thing which the Minister for Finance could consider in future Budgets is to remove the stigma that getting old means getting less CPF contributions, especially for the workforce above 50 years of age. The way to do this is to pay for ability according to the value of the work, without any form of discrimination. This is the surest way to say what we mean in promoting the value-add and worth of older Singaporeans to stay in employment.

Workfare

Sir, our Workfare scheme must be applauded for being pragmatic, innovative and, I would add, exemplary. Workfare is an innovative approach and a viable alternative to welfare. Many governments around the world have introduced welfare to help their poor, only to be mired by huge welfare costs and a widespread culture of dependency. By supporting citizens who are effectively employed, the Singapore Government has creatively delivered the benefits of welfare support without its attendant problem and risk. With Workfare, we are meeting the needs of lower-income groups who are disadvantaged by globalisation. Indeed, through Workfare, Singaporeans can enjoy

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the globalisation cake and eat it at the same time.

But, Sir, I am also moved to raise a few questions on Workfare. Eligible workers who have worked for at least three months in the first half of 2007 can look forward to their first Workfare Income Supplement (WIS) on 1st January 2008. To receive their WIS, they have to wait between six and nine months. Is there any reason for this long wait? If the WIS is meant to be an incentive to work, the impact of a deferred payment may dilute this incentive.

Sir, Workfare is new and needs to be further tested and reviewed after three years. With an ageing population, the numbers eligible each year may go beyond the current 438,000 beneficiaries. I therefore wish to ask what kind of proportions or provisions would the Government be making to ensure that there will be sufficient funds beyond the current Budget of $400 million a year as well as to ensure continuity of Workfare.

GST increase

Sir, let me now turn to the next tap - GST. Many have raised concerns that future reductions in direct taxes may lead to future rises in GST and are keen to know how much further will GST rise to reach an optimum or sustainable level. As proposed by the hon. Member, Mr Inderjit Singh, to make GST affordable, we should zero-base our essential consumables. Whilst help will be made available to about 10,000 unregistered firms wishing to register for GST, the question is: how can such small firms be assisted over a period of time to address additional operating costs and overheads? Is there any target number of firms that IRAS is working on to convert the GST-registered companies? Many businesses have also complained that IRAS takes a long time to refund the GST rebates and this can

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affect their cash flow. I would like to ask what steps IRAS will be taking to speed up this process.

GST offset package

Sir, the GST offset package is essentially pocket money given to help Singaporeans cushion the impact of a higher GST. Most common folks get the GST credits and so do NSMen and NSFMen for the National Service that they perform.

Sir, like my colleagues before me, there is another very important category of Singaporeans who actually perform two times national service. They perform national service of staying at home to bring up their children and look after the family. They also perform the extra duty of contributing to the population growth, if cajoled correctly. Unfortunately, they are again left out of this "hong bao" distribution. Will the Finance Minister consider including housewives in future offset packages?

Sir, I would now like to raise four other issues which are critical in enhancing our competitiveness and social fabric.

Empowering PMETs

Sir, PMETs form a most susceptible group to the forces of globalisation, outsourcing and flattening of organisations. During the last recession, 40% of those retrenched came from this group. We must recognise PMETs as a source of rich human capital, with substantial expertise and experience. If well managed, it can enhance our competitiveness as a nation. Their number is not small, and many will be joining their ranks as restructuring of organisations continues in this globalisation.

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Sir, displaced PMETs do not need welfare, but they do need help in transitioning. Many have found themselves in a serious financial bind, and this has caused a great psychological effect on their self-esteem. To survive, most have moved to lower-ranking and lower-paying jobs which may not optimise their qualifications, skills and experience. Retraining for other jobs may help them overcome their financial problems by taking on other jobs, but I wonder if we are optimising this group of human capital. I have two propositions.

Firstly, we cannot prescribe the same kind of measures for PMETs as we do for lower-skilled workers. I therefore advocate for a Change Management programme as a foundation course. This will help them to cope with their new situation and manage their self-esteem. Change Management should be a precursor to their retraining.

Secondly, I propose an organised structure to help PMETs in enhancing their competencies and career transition. Currently, they do not fit into our existing structure of retraining and re-employment. A specialised body, like the Lembaga of the past, that understands the value of PMETs as a rich source of human capital and that better understands their unique predicament, will help leverage the value of this group.

Sir, I am heartened that the Minister for Finance intends to allocate more funds for continuing lifelong education. I look forward to the Finance Minister extending the same funding as the PSEA to other professional training providers for PMETs. I would also like to ask the Minister for Finance what immediate plans he has for PMET adult learners on change management and competency training.

Rooting the souls for Singapore

Sir, the second issue I would like to raise concerns the rootedness of

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Singaporeans. A Straits Times' survey of 2,000 teens from Singapore, China, Japan, Malaysia and India last year found that 53% of Singaporean teens expressed a desire to emigrate. Last week, I chaired a panel organised by the SIF to reach out to overseas Singaporeans. They raised problems they face, ranging from encounters with our official overseas agencies, on children's education on relocation back home and lack of support for budding Singaporean entrepreneurs venturing overseas.

My stance is that while understanding the resource constraints faced, the overseas Singaporeans' feedback should be given serious due consideration. The Straits Times of last Saturday quoted MM Lee as saying 370,000 Singaporeans (citizens and PRs) were guesstimated to be living overseas, and this is no mean number. And it is not a monolithic mass. I believe they range from children of well-endowed families who, having studied overseas, remain to work in better-paid jobs in advanced First World countries; executives sent by the public sector, MNCs, GLCs and larger private companies who can earn significantly higher disposable residual incomes in countries with much lower cost of living; retirees (legally, voluntarily retired or otherwise) who relocate to more laid-back places or cheaper countries in the region for various reasons, such as in search of their personally defined better quality of life, large spaces and hence less pressures, and it does not matter whether the differential pressures are actual or perceived; those squeezed out by the recession and structural shifts and not yet absorbable by the selective growth happening back home, who seek out incomes overseas, etc.

Sir, the Government has done a good job for Singapore and Singaporeans as a whole, and it is right that it cannot possibly solve all problems, given that the fundamental ideology of no welfarism

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cannot be breached because we are a special, vulnerable and small country. We should, however, recognise and give our overseas Singaporeans, particularly the relevant subsets, some due respect, appeal to their heartstrings and have their souls rooted for Singapore and, if possible, give them access to opportunities, not handouts, in a level playing field.

Sir, I would like to ask: how successful have Government efforts been in engaging the young and our overseas Singaporeans? Will we be able to root their souls for the New Brave Singapore of 2020?

Plight of the poor and aged

Sir, when I spoke before this House last November, I called for a finer mesh for our social security net. It is necessary for me now to repeat that call, but with greater urgency.

There live in our midst today a small group of destitute people in prosperous Singapore, and we wonder how that could be so? You can bring a horse to the water but you cannot get it to drink. For a special group of Singaporeans, it is not just a case of not drinking the water. Some do not see the water even when they are standing at the edge. Others suspect the water has been poisoned, so one sip would kill them. Yet others believe that they would be severely punished by the Government if they dare to take even a drop. Another lot says if they do not have their own water, they must not drink it when it is offered. This small group of people in Singapore are at the bottom of the bottom-most, not because there are no safety nets for people like them. There are aplenty but, because of the way they are or have become wired, they are just unable to understand what is available, what is for their own good to accept and so continue

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to suffer the saddest deprivation in the midst of plenty when it is all so unnecessary.

This group falls out of reach of all the good Government intentions and facilities, such as Workfare. Do we shrug our shoulders and say, "Well, if they would not accept public help, it is their right?" This is just the cop-out way and must be eschewed.

When those rejecting help are so obviously in distress, and yet so obviously oblivious to the precipice, a caring community can and should devise ways to accommodate this group, which is probably more vulnerable than an underaged autistic kid. At least the kid would have the care of his parents, not for adult underprivileged.

Sir, I would like to cite a case, a family of three disabled siblings in their 50s supported by one sickly sister in her 50s. Two are mentally retarded and one other is both retarded and deformed. Another normal brother, faced with his own financial problems, has avoided visiting them. My worry is whether this precariously poised group would one day slip through the net for lack of family support or mental capacity to make the wise choice, ie, to go to a home when they are unable to look after themselves anymore.

I would like to ask our Prime Minister whether the Government would consider introducing laws to make such destitute and disabled persons wards of the court, to be sent to homes for their own good. How many of such cases are found in our midst? I would also like to plead that each constituency maintain a register of the poor so that they can be identified for counselling and support.

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Mindset change

Sir, our Government, indeed any government, works through a system of rules and procedures that creates consistency and transparency in the provision of public services. But rules must also make allowance for exceptions. And handling exceptions often requires unconventional thinking or thinking out of the box.

We need a more systemic change

of mindset among our policy-makers. Sim Wong Hoo said it aptly that we should be able to do anything unless there is a rule that says we cannot, rather than not do anything unless there is a rule that says that we can. That mindset will enable us to achieve a lot more.

Sir, continuous improvement and making a quantum leap in service improvement often require radical changes in our mindset. This is also the essence of innovation, and I hope that we can instil that as a culture within our civil service, if not the nation as a whole.

Sir, in conclusion, let me applaud the Government once again for its success in managing the many and divergent expectations of the people. This year's Budget has certainly managed to please most of the people most of the time.

But I also ask that the Finance Minister would think through our current system of support and subsidies. The system works for the overwhelming majority, but we owe it to ourselves to ensure that just as "we will leave no one behind", we will let no one fall through the cracks.

Sir, managing exceptions may be just as challenging as managing expectations but die-die must be done. On this note, I support the Budget.

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5.01 pm

Mr Alvin Yeo (Hong Kah): Mr Deputy Speaker, Sir, I rise to support the motion, and add my applause to a Budget that was comprehensive in its coverage, far-sighted in its initiatives and most eloquently delivered.

The move to keep Singapore attractive to investors was well-balanced with looking after the less well-off. The innovation of Workfare, as opposed to welfare, keeps us lean and resilient. I would also single out the Senior Citizens' Bonus, which helps to address the concern that the elderly do not benefit from the CPF and income-related measures. I hope this will be a regular feature of future Budgets, in the same way that NSmen get additional recognition, for the contribution of the older generation in nation-building.

However, there are two aspects of the revenue policy, for which I would ask that further consideration be given, at least in terms of clarifying the way ahead. These two aspects have been raised by other Members but I would like to add my own perspectives. I would also speak on two broader topics, not directly tied to matters of finance, which I feel are part of the stated Budget objective of making Singapore the best place to live and grow.

Personal income tax

I am gratified to note the Government's aim to keep personal income tax rates low. As the Second Minister has mentioned, this incentivises Singaporeans to work hard and reap (and keep) the fruits of their labour. It is also necessary to help attract and retain talent for our economy to grow. But the move to reduce corporate tax has created an anomaly between our corporate rate of 18% and our top marginal tax rate of 20%, which was not present before. Even when our corporate tax rate was cut from the high 20s in previous Budgets, a clear

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projection was given as to when our income tax rates would be brought in line with it.

This is important as business people have a plethora of choices now, as to the vehicle to carry out their business. To give an example, they are not just partnerships, but now also limited partnerships and limited liability partnerships. Yet, these entities would be taxed at a different rate from corporations, which can affect the assessment as to how to structure one's business. If the plan is, as in the past, to harmonise the income with the corporate tax, those business people would want to know. Uncertainty is generally not a businessman's friend.

Tax rates also have an impact on attracting and retaining talent. Just yesterday, the Straits Times ran an article on how Singapore and Hong Kong are neck and neck in terms of attracting the sort of high-end talent needed to drive our financial services sector. Even though, as the Minister points out, individuals with incomes of up to half a million dollars pay less tax in Singapore compared to Hong Kong, Hong Kong salaries - certainly for professionals - are generally higher than in Singapore. For senior executives and top-earners, Hong Kong also has a lower effective tax rate. And they are not standing still either. Their Chief Executive, Mr Donald Tsang, has pledged, if re-elected, to reduce income tax further, to 15%.

As a lawyer in private practice, I have seen plenty of young talent leave our shores to further their careers abroad. Remuneration is a key factor (albeit not the only one) for their choices. I have received similar anecdotal feedback from other professionals and corporations. All this despite raising salaries - it has been reported that the Big Four accounting firms and the major law practices have all increased salaries for fresh graduates and beyond. I believe that even the public sector, including the civil service, would

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face difficulties in recruiting amidst the global competition. One wonders how the civil service, for instance, would be able to recruit the talent it needs without similar wage increases. Yet, we cannot keep on seeing wages rise across-the-board without it eroding Singapore's cost-competitiveness.

Singapore has a limited talent pool to begin with, given our population size. We need every incentive to keep our talent here and attract additional talent from overseas. Income taxes play an important part in the decision-making of such people who, by reason of their skills and experience, are highly mobile. Even if the anomaly with corporate tax cannot be rationalised now, a clear statement that it is intended to do so, and an approximate projection as to when this would be implemented, would be helpful to keep us ahead in the competition for talent.

Estate duty

Currently, our estate duty regime exempts movable property, eg, money in bank accounts and shares, up to an amount of $600,000 while there is an exemption of up to $9 million for residential properties. These two amounts seem disproportionate to one another. It could be seen as inviting, for estate planning purposes, over-weighting one's resources into property, and only residential property at that, which is hardly prudent nor in tune with modern investment strategy. These exemption limits, I suggest, clearly do need some re-working.

The Minister stated that he would take the calls to rationalise the structure of our estate duty, together with the decision on whether to retain estate duty at all. This is welcome news. But there is some urgency in this. As we strive to develop Singapore as a centre for wealth

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management, to one day rival or even surpass Switzerland, such an asset tax appears to be a retrograde step. And so I would urge the Minister to clarify when this review would be completed, so that if estate duty is to be retained at all, its structure would be a more rational one.

I would now like to touch on two topics, not directly related to matters of finance, but which have an impact on our society at large and our overall competitiveness.

Access to counsel in criminal matters

The first relates to our legal system, and specifically to the right of a person accused of a crime to get advice from his lawyer. Although the right to counsel is enshrined in our Constitution, case law has decided that an accused can be denied access to legal counsel until after the police have completed their investigations. There is no fixed time limit to this, which means that an accused would not have the benefit of his lawyer's advice for days and weeks, maybe even more. In a recent case where the issue arose, Leong Siew Chor versus Public Prosecutor - this was the man who was convicted of killing his China girlfriend and cutting her body into parts for disposal - he did not have access to his lawyer until 19 days after his arrest. In that period, an accused person might be interviewed by the police many times. In each of those interviews, he would typically have given a written statement, which could be used against him at the eventual trial. All without the benefit of legal advice.

We are rightfully proud of our criminal justice system and law enforcement agencies, which keep our streets safe and our crime rates low, probably lower than other major capitals of the world. I am not advocating some dramatic u-turn which places the rights of an accused person above the rights of the general populace to be free from the insidious

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effects of crime. I would also make clear that I am not referring to the extreme threat posed by terrorists, triads and the like. Those persons are governed by special legislation, like the Internal Security Act and the Criminal Law (Temporary Provisions) Act, where extreme measures are clearly justified. But apart from such cases, there does need to be some balance between the individual and the State and currently, it seems too tilted against the individual in this regard.

I believe that, like other developed legal systems, it would be appropriate to set some time limit beyond which an accused would be entitled to counsel. This time limit could be in days or even up to a week. There could also be a provision for extending the time limit, if sufficient cause is shown to a judge. The police would still be able to go about their work, but would be mindful that the accused would have access to his lawyer before too long. This should not hamper the investigation of crime, indeed, it may facilitate it by focusing effort on completing such investigations expeditiously. And it would be a measure of protection to an accused person who should still be presumed innocent until proven guilty.

But why is this of such importance? It is not just for reasons of fairness and justice, although those are reasons that stand on their own. But you will find that in any international ranking of competitiveness, one factor that Singapore always scores highly in is the Rule of Law. Our judiciary is rightfully regarded as one of the best in Asia, if not the world. Beyond its contribution in dollar terms, I think less than 1% to GDP, the legal sector lends an intangible quality to Singapore as a financial centre and destination for investments. There is real confidence that anybody, local or foreign, big business or private individual, gets equal protection under our law. Any

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matter that detracts from our forward-looking legal system, which has to balance the competing interests of the individual and the State, subtracts in a way that cannot be directly quantified, our overall attractiveness to the external investor.

Giving our students the teacher attention they need

The final topic I raise concerns education and specifically, the size of classes, and the ratio of teachers to the number of students in each class.

A couple of years back, the Education Ministry introduced smaller class sizes, of about 30 pupils as compared to 40 previously, for primary 1 and 2 students. This is certainly a step in the right direction. But the question is: are there plans to reduce class sizes for other primary and second level students as well? If so, what is the timetable for this to take place?

The benefits of smaller class sizes are not easy to quantify. But I would suggest that, based on intuition and common sense, a teacher who is able to devote more attention to a smaller group of students, can help the less able cope better, and the more able to flourish.

Drawing an analogy with the parent-child context which most of us are familiar with, do we not all agree that giving more time to our children, especially during their formative years, will stimulate their development? This is also borne out by the experience of other countries, which are well-regarded for their education systems and produce more than their fair share of Nobel Prize winners as well.

In England, the average class size for primary schools in 2002 was 26.4, for secondary schools it was 22.0 ( Source: Statistics for Education: Class sizes and Pupil Teacher Ratios in England, published in February 2003 by the Department of

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Education and Skill ). In the United States, the average class size for public schools in 2000 was in the low 20s, the figure for private schools was below 20 ( Source: Special Analysis 2002 - Private Schools: A Brief Portrait, published by the National Centre for Education Statistics ).

At home, we have international schools such as the Chatsworth International School which states on its website that it has a maximum class size of 20. Even our Gifted Education Programme or GEP, for our brightest students, has an average class size of 25. This compares to the average in 2005 for primary schools of 36.1 and for secondary schools of 36.5 ( Source: Ministry of Education website under Statistics 2005 ).

Nobody should underestimate the resources that would be required to bring down the average class size by, say, one quarter. That would require about one-third more teachers, plus correspondingly more classrooms. This clearly cannot be achieved overnight, and would take years. However, it is a vital goal to aim for.

It is not just for our gifted children, but also for our above average, average and below-average students. Education is about making each student the best that they can be. And Singapore needs its people at every level to be capable and competent in what they do, to maintain our edge. After all, it is not just the brain surgeons and investment bankers we need, but also the technicians, production operators, hairdressers and cooks, to drive our economy. This Government has continually stressed the paramount importance of education, which view we all endorse. So we should be prepared to make the sizeable investment that is needed to enhance the learning process. A start has been made, but I would invite the Minister for Education to outline the

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further steps to be taken, to carry that objective through to fruition.

In conclusion, this has been a well thought-out Budget. More can, and I am sure, more will, be done in future years. However, this Budget strengthens the foundations laid by previous governments in preparing Singapore for the challenges ahead. Mr Deputy Speaker, Sir. I support the motion.

5.18 pm

Ms Cham Hui Fong (Nominated Member): Mr Deputy Speaker, Sir, this year's Budget is indeed one that is generous and gracious, as echoed by many of the Members here and our elected leaders. First, the Budget is pro-business, as you can see from the two percentage point cut in the corporate tax rate which will cost the Government $800 million. But I would like to look at that as a $800 million savings for the profitable companies out there.

Then there is this cash rebate on the CPF contributions for the employers and employees for the SMEs that make up about 99% of the establishments and employing more that half of the workforce in Singapore. I think this will certainly ensure that Singapore will remain economically sound and competitive and with this, we can expect and look forward to more and better jobs for the people. So a pro-business budget that is job creating would therefore be a pro-worker's budget.

As one of our elected leaders said to us yesterday, Swithun Lowe from Singapore Teachers' Union said that, "This Budget marks a historical significance because it provided for the fourth pillar - which is the workfare - with the fundamental principle of self reliance as in, 'You help yourself, we will help you'". I think this, in particular, has tilted in favour of the lower income

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worker, someone who needs the assistance more than anyone else. So this is again good news for the lower income workers.

The middle income group has something to cheer on, which is the CPF restoration. We spoke to the unions - the higher-end unions from the banks. Wee Soon Guan from the banks told us that although their employees from the banks do not benefit from the workfare, they are happy that the Government has kept its promise and faith by restoring part of the CPF when the economy has recovered. This is something that we appreciated very much.

Sir, we would also like to thank the Government for paying special attention to the elderly folks. Last year, the Progress Package provided something for the older people. Likewise, this year, the Senior Citizens' Bonus is a wonderful recognition of the elderly in Singapore who have contributed or who are still contributing to the making of Singapore.

Sir, I would like now to touch on the older workers. I think the signal that we get from this Budget is strong and clear, ie, get a job and work if you are able to. Sir, it is easy to say that but there are still workers out there, the older ones and the lower skilled, who, once displaced, find it difficult to get back to the workforce or, when they re-enter the workforce, feel they are under-employed. So with the introduction of Workfare, I think there will be mounting pressure on everyone to ensure that every Singaporean out there who aspires to work, who want to work, must find a decent job. I think this is a fair request because anybody out there who wants to get a job should be given the opportunity to work, provided that the older workers here have this right mindset change, ie, they must be prepared to adjust to the changes and, at the same time, employers must have this mindset change to employ older workers.

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So NTUC has started to work with employers (about 167 companies) over the last one-and-a-half years. We now have about 2,500 older workers being re-employed, that means they have already hit the retirement age and they are re-employed. While we are happy to have hit these 2,500 workers, we believe more has to be done. We need a more sustainable and progressive approach to ensure that these 2,500 workers can continue to move on, and more people that are actually joining this age band can continue to move on beyond 62. We realise that raising the retirement age itself is not going to be the right way to do if the real changes at the workplace are not being addressed as in the needs of the workers and the needs of the employers. So what is the right approach? Unfortunately, there is no easy answer to this.

The changes in the CPF rules on increasing the Minimum Sum and phasing out of the 50% withdrawal rule will have significant impact on the money that our workers can receive upon reaching 55. If you look at the Singaporeans who turned 55 in 2005 and who have been actively contributing to their CPF, only 40% of them have met the Minimum Sum after pledging half of the amount into the property. And if you do not consider the property pledge, only 20% of them have the Minimum Sum in cash.

So what does that translate to? Effectively, it means that our workers will therefore need to work and, I believe, this is something that they totally understand - that there is a need for them to work. Many of them are asset-rich, but cash-poor, and life expectancy is on the upward trend. Of course, coupled with the lower fertility rate, it has also compounded the issue of an ageing population.

Family support is certainly important but is seems to be shrinking. I hardly

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even hear much about three-tier families nowadays. Based on a national survey that was conducted by MCYS two years ago, the proportion of those elderly who are 55 years and above depending on their children as a source of financial support has dropped from 76% in 1995 to 66% two years ago in 2005. So I do not want to think what will happen in 10 years' time. I totally agree that a strong family unit with mutual support is necessary and we have to do more to encourage that. It is clear that there must be a multiple approach to address the issue of the ageing population.

Whilst some may want to work to keep themselves mentally and physically healthy, there are many others who need to work for financial reasons and for the pride and they do not just work to pass time. So we have to step up our efforts to help these older Singaporeans to get back into the workforce. For those who are now in the workforce, we have to find ways to retain them. For those who are not there, we have to find ways to encourage them to get back to the workforce and provide opportunities for them to work beyond the retirement age of 62.

Some of the companies that we work with needed the workers. In the case of G B Yachts, because they are the ones who need the workers to do carpentary work for the high-end luxury yacht, they cannot find the skills anywhere else, so the workers are fortunate enough that they continue to be kept in the company and they are still working at the age of 60 and 70. We also have some employers that are proactive as they recognise the tested values of the older workers and help to create new jobs for them.

PUB is one good example. They identify new areas and they train up these older workers to take on new job roles because they appreciate the values and

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experience that these workers have and they know that they will have a shorter learning curve to enable them to take on these new job roles. SBS Transit is another one. They create new job roles - driver mentors - for drivers to be trained up to be mentors to the new drivers. So I think these are very good initiatives.

Then we also have companies that understand that the work environment has to change because whatever they will be operating on will be an environment suitable for the workers 30 years ago when generally the people were relatively young. But, today, if you step into some of the older companies, you will realise that the workforce has aged tremendously. So the work environment has to change to cater to the needs of these people and we have seen some companies tapping on the Advantage fund that allows them to equip the workplace with new environment so that it is older-workers friendly. Tan Tock Seng Hospital and some other hospitals are good examples of this. They have actually made full use of the fund to transform the place to one that is elderly-friendly, to allow the nurses, the older employees, to continue to be there to serve the public.

We do have companies that tell us that wage is a problem. Seniority-based wage system is still a concern although studies did show that a high percentage of companies have moved into a flexible wage system. We know that this is not enough because we have to do drastic change to the wage system that we have today to address the problem of the seniority-based wage system that we have.

Keppel Hitachi Zosen is one good company. They believe that they want to keep this group of older people but they do acknowledge the fact that if we do not address the wage system, they will have difficulties in keeping the competitiveness

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of the company. So what the union has done with the company is to ensure that they move towards one that is performance-based. So, as a result, the wages of the workers are no longer paid based on their seniority. It does not mean that if you are in the company longer or you are older, you are paid more. You are paid based on the value of the job, based on your output and based on your performance. So, there is no difference between a younger worker and an older worker. This is something that we want to encourage and we will certainly want to work with more companies to come on board.

These are some good cases that we have seen but we do not think that we have seen enough cases. So we need more companies to come on board to look at their wage structure, to redesign their work environment, to be elderly-friendly and look at where are the opportunities for the older workers. Because if we were to bulldoze our way to insist that companies must re-employ the older workers, what is going to happen is that if there are no substantive changes to the workplace, workers will not be competitive, jobs will be lost, and they will be replaced by the cheaper foreign workers. This is something not anyone of us wants to see.

So with the reduction of the CPF for the older and lower income workers and the lowering of the corporate tax rate, we hope that companies can make full use of this good opportunity. When the economy is doing well, when they are still profitable, re-position themselves, and find new ways to create opportunities for the older workers. We need them to come up with the commitment to help to identify these opportunities. It need not be the same job or the same pay but it must be at least a decent job for these workers who have actually contributed to the growth of the company. So it is time that we recognised them.

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Our leader, Victor Phang from SATSU, openly told the companies that companies can use less of the workers but they are not useless. The only resource Singapore has is its people. Now that the labour market is tightening, now that we need more workers to help the economy to grow, as the Chinese saying goes: " ren jing chi cai wu jing chi yong ", we should maximise the talent of our people and optimise the resources that we have. Recognise the values and experience that these older people have so that we can enable them to continue to contribute to the society and play a fair share in the economy.

5.30 pm

Sir, I have also received some feedback on this Workfare Income Supplement for the lower income workers. While it is good news for them to have a higher take-home pay, the good news for the employers is to pay a lower CPF contribution, what it will effectively mean is that they will have lesser CPF contribution for the six months commencing this July until next January. So, some of my older members, who are now currently topping up cash for their housing loans each month, have this concern that for the next six months, they would probably have to top up even more cash during this period when there is lesser CPF contribution to the account because they are expected to only get their first tranche of WIS only in January. So the question they have asked is: would there be some flexibility? They would like to know how to deal with this six-month slack before they collect the Workfare Income Supplement next year.

Sir, I would like to move on to the next aspect of the Budget, which is on the contract workers. Contract work is not a new phenomenon in Singapore and we have seen that for many years. Buy-in companies outsource the non-core

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functions to focus on the core business and I think this is perfectly all right. But, unfortunately, what we have seen over the years is exploitative and cheap sourcing of companies. Some buyer companies have absolutely no clue as to who they have actually outsourced the contract to, because they did not know that the contractor that they have outsourced to has subsequently sub-sub-subcontracted to many other sub-contractors. As a result, what we have seen is that workers are not paid salaries on time. Sub-contractors can just disappear without paying the workers their salaries. In some cases, if the worker does not come to work for one day, his pay can be deducted for three days. And there are just so many creative ways of exploiting the workers that one can imagine.

So the labour movement now is working with the Ministry of Manpower and also the CPF Board on a "3E" approach, because we understand that if we want to tie this Workfare to CPF or Medisave, we need to get more people on board this scheme. So we adopted this three-pronged approach, which is essentially to educate the workers. They need to understand what is the rationale of linking. Why is it that they do not get the cash outlay which they used to enjoy last year. We have to educate them about the long term effects on them, the implication of them having Medisave that will meet their retirement adequacy and also their medical needs in the long run.

Next, we have to also engage the buyers because they are the ones who award the contracts. We need to engage the buyers to let them understand that they have this social responsibility, that they need to do this to ensure that the workers are being treated fairly - not just workers under them but workers who are working with them. And the third part is

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to really enforce the suppliers to make sure that they toe the line.

Sir, we are fully aware that this is an uphill task to eradicate all the errant contractors. We have tried for a few months. It seems endless to clean them up. The moment we chase after one, the next moment we realise that they have closed the company, changed the name and the same thing happens again. So we have to really put in more efforts to do this and, at the same time, when we talk to the workers, to encourage them to come on board, to file a complaint with the Ministries. They are worried that they will run the risk of losing their jobs if we were to push for CPF payments. Can we guarantee them another job? We cannot, not immediately. So this is the dilemma that we are facing. We need more concerted efforts from responsible employers, for the Government to come in with the enforcement and, of course, we will continue to speak and educate them.

Last year, there were some 120,000 workers who signed up for the Workfare through self-declaration. I believe that there should be more than this number because some of the contract workers that we spoke to - we have a team of about six people who are going round to talk to them - told us that probably half of them were totally unaware of this Workfare. They assumed that they were on the scheme and there were some who did not dare to apply for fear of implicating their employers. The moment they fill in the name of their employers, because they need to declare where they work, the nature of the job, they think that the CPF Board will come chasing after their employers and they would lose their jobs. So there is a lot of fear among the workers and they dare not apply for the Workfare.

Sir, I hope that the SMEs' cash rebate on the CPF contribution could help these contract companies to defray the cost and

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therefore be more responsible and put these workers on the CPF scheme. I have one company in the chemical sector, Mediagate, which produces CD-ROMs. We spoke to them recently that they have to put their workers on CPF. We are quite happy that they agreed. They went back to talk to their suppliers and they even have a provision on the contract that they have to pay the contract workers CPF. On top of that, what they have done is that they even get their employee to act as a supervisor to supervise these contract workers and show them that they are treated fairly and they are on CPF. Sir, this is one company that illustrates very good social responsibilities. They believe that even if they are not directly employed by them, they have the responsibility to see that the workers working on their premises, working side by side and next to their own workers, are treated fairly.

But do all the buyer companies think the same? Unfortunately, not so. We do understand some of the constraints that they face because when we spoke to them, we understand that it is difficult for them to police and that is the main reason why they have outsourced. They do not have time to look after this group of people. That is not their core function. When they outsource, they usually outsource to more than one and it could be five or 10 because they cannot be dependent on just one. They have told us that it is not easy to police this although they very much want to help us. And some of them told us that if you whistle blow, enforcement would have to come in and the same problem would arise as to what will happen if the contractor starts to pull out. It will also affect their operation. And some of the companies told us that we have to be fair to them because if you whistle blow on them, you have to make sure that you do the same to their competitors out there, because they cannot lose their competitiveness. We are quite happy to hear that because

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we know that they will start to sabo one another and start to tell us who are the ones that are not paying. But this is going to be even more difficult because we have to really clean up the entire industry. But we believe it is doable, and will continue to try.

Sir, I totally agree that we have to get more workers onto the CPF scheme on the basic fundamental that CPF provides for in the long run. So Workfare is only part of the solution. While we welcome Workfare as a permanent feature, we do not want our individual workers to regard this permanently They should not do it because we do not want them to be recycled again and again in this low-end market and continue to be a beneficiary of this Workfare. Although the Second Minister for Finance said that 438,000 Singaporeans would benefit from this Workfare - this is probably about 16% of the working population - we hope that in three years' time when we review this, this number would have dropped significantly because our intention is to ensure that lesser people are on this Workfare scheme and more people are self-reliant and out of this scheme to be able to fend for themselves.

Sir, what we need to do is really to equip these workers if we do not want them to be perpetually on this Workfare scheme. We need to equip them with the right skill sets so that they are able to take on better jobs. Today, the training mechanism does not quite support casual or contract workers who do not have regular employers. It is almost unlikely for them to benefit from employer-sponsored programmes as their jobs are short term in nature. And individual-based training does not quite suit them because it is very much institutional-based and it is only a handful, very limited in scope, and only a handful of courses that I can think of. We have tried talking to a few companies because we could not get the employers

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to sponsor. As far as the employers are concerned, these workers are only going to be with them for five or six months and they are not going to be regular. As far as the labour suppliers are concerned, these workers are not permanently with them. Today, they can be with them; tomorrow, they can be somewhere else. So we have a lot of difficulties getting them on board to provide some training programmes which are helpful because they need some functional kind of training for them to actually move up.

So, to overcome this, we have already started a pilot project with ST Aerospace to convert 20 casual workers to direct contract employees on 1st December last year. We only have 20 now although there are probably about more than 100 casual workers. We probably have to do it step by step. So these 20 contract workers who are now under direct employ of ST Aerospace benefited from some training because ST Aerospace, as the employer, claims for recruitment and training under the Advantage Fund. I think this is a win-win-win. As far as the employers are concerned, they have got a more stable workforce. They have got people whom they know will certainly come every day and the workers are also happy because they are paid CPF, given some core benefits like medical and leave. For the labour suppliers, they are probably the ones that are a bit sore because they were previously their employees and now they have actually moved on to join ST Aerospace and they are the better employers. I think as far as we are concerned, the union is happy, the workers are happy and, of course, the employer, ST Aerospace, is happy.

So we have to continue to work with more like-minded companies on this, who are prepared to spend a bit more to train the workers even though they may not be directly employed by them, but they

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believe that if these people continue to work for their company, they must have value-add.

They must have the right skill so that they can continue to contribute. So there must be new approaches to address this. We are now currently working with our NTUC colleagues who have some competencies in re-developing the industries as they have some experience in transforming the security and the cleaning industries. We are working with them, WDA and some economic agencies to see how we can re-develop some of these industries that are flooded with these low-end contract workers. What we hope to see is that the day will come when every contractor is a best source contractor. Every contract worker is paid better and he takes pride in his work. It will certainly take a lot of time but I think we have to start somewhere and we are committed to do this.

Sir, contract workers are one big group of workers that the Government, employers and the industry players need to pay more attention to if we intend to let them move up the value chain. We hope that the Government, as the biggest employer, will ensure that cheap sourcing does not happen in the Ministries or in the Government agencies. At the same time, the labour movement will continue to work with MOM, the employers and relevant agencies to re-develop the industries, to retrain the workers, to re-design the work, and to reward the workers accordingly.

Sir I would like to thank the Government for this bold and socially inclusive Budget. I fully support this Budget.

5.40 pm

Mr Siew Kum Hong (Nominated Member): Mr Deputy Speaker, Sir, thank

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you for allowing me to participate in this debate.

Sir, our economy is growing at a very healthy pace. Many Singaporeans have benefited and will continue to benefit from this growth, some more than others. But many others have not, and have instead been disadvantaged by the inexorable economic logic of globalisation.

Sir, the result is an income gap that has, by measures like the Gini coefficient, widened over the years. Indeed, our income gap may now be bigger than that of the United States, which was one of the more troubling revelations in a recent paper published by the Department of Statistics. I think it is fair to say that the benefits of Singapore’s growth are being disproportionately concentrated at the very top of the population.

It is against this backdrop that this year’s Budget is being introduced and debated. Indeed, the Budget Statement contained two recurring themes: ensuring continued economic growth for Singapore in a globalised world, and helping the low-income cope with the onslaught of globalisation.

Sir, there were four key announcements in the Budget Statement: the corporate income tax cut, the increase in the GST, the increase in the employer’s CPF contribution rate, and the Workfare Income Supplement. Many other measures were announced, but these four clearly grabbed the headlines.

While it seems intuitively right and proper to lower taxes so as to maintain our attractiveness to investors, I cannot help but wonder whether we are engaged in some sort of race to the bottom in cutting taxes. Is that what globalisation is about: an unending race to keep up with the Joneses of Hong Kong, Ireland and Eastern Europe, in meeting the incessant demands of globally mobile capital for ever lower taxes and costs?

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Sir, this cannot be healthy or sustainable in the long run. For instance, we may never be able to match Hong Kong’s tax rates, if only because they do not have to fund a defence budget. Let us also not forget that the US, with its federal corporate tax rate of 35 per cent, attracts massive amounts of foreign direct investment. So the headline tax rate is just one of many relevant factors considered, when investors decide where to channel their funds.

Just as we have long ago decided that our economy cannot compete on the basis of low costs, we also cannot keep competing on the basis of low tax rates. A low tax rate may help to attract investments, but it will not be sufficient in and of itself. So we will need to sell Singapore on our other strengths as well: quality of life, relative lack of pollution, greenery, safety, stability and reliability. And we need to continuously strive to maintain, and improve upon, these qualities.

Sir, to maintain and ensure fiscal sustainability, we will be increasing the GST by 2 per cent. This will inevitably increase the cost of living in Singapore. The Government’s response is the GST offset package.

The offsets are skewed in favour of the poor and the elderly, and I think rightly so. If we accept that we have limited financial resources, which surely we have to, then we must also accept that these resources should be deployed towards the areas of greatest need. Our focus must be to help the low-income survive and get by, and not so much to help the middle-class meet their aspirational goals.

Having said that, perhaps more could be done to help the so-called “sandwich class”, that is, the households caught between the twin demands of raising

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children and supporting parents. A Baby Bonus top-up would have been welcome, as would expanded parent relief.

Furthermore, while the GST hike affects everyone, many of the GST offsets will benefit only homeowners. This leaves out those who rent, and those who still live with their families, which I must admit includes myself. I hope that, if and when the next GST increase comes around, the Government will remember to provide some relief for this group.

Increase in employer’s CPF contribution rate

Sir, the employer’s CPF contribution rate has been increased by 1.5%. This is a recognition by the Government that the economy is good, and has been good for the past few years, and so it is time to restore part of the CPF that was cut during the tough years.

I fully support the Government’s decision to increase the employer’s CPF contribution rate. It sends the right message to workers, that the Government has not forgotten the sacrifices made when times were tough, and will reward workers now that times are better. Perhaps more importantly, it compels employers who would otherwise not have increased salaries to do so, albeit through CPF contributions. This ensures that the benefits of the growing economy are more evenly spread across the workforce.

But Sir, I would urge the Government to reconsider using CPF contribution rates as a counter-cyclical tool to manage the economy. The Government has stated that it will keep overall CPF contribution rates at between 30% and 36%, and will adjust it depending on economic circumstances.

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As others have pointed out, there is an inevitable lag between the start of a slowdown or recovery and the time when the Government decides to adjust the CPF rate. This time-lag means that the adjustment may end up being counter-productive. It can also wreak havoc with people's financial planning. The CPF’s primary objective is to help people plan for their retirement. Along the way, it has acquired a secondary purpose of funding housing needs. These objectives require people to make long-term plans, which can be upset by sudden changes in the CPF structure or contribution rates.

I would therefore ask the Government to consider setting a fixed CPF contribution rate, and then allowing people to do their long-term retirement and housing planning based on this rate. This will provide the certainty that is so essential for this sort of planning.

Workfare Income Supplement

Sir, the single-most striking policy announced this year is the Workfare Income Supplement. It is not a new concept. The US introduced the Earned Income Tax Credit in 1975, and the UK introduced a similar scheme in 1986.

Sir, I will be blunt. In my view, the WIS is one of the most important programmes to help the low-income in Singapore’s history, and I applaud the Government for introducing it. As the Second Minister for Finance said, and I quote: "For the first time, the state will be supplementing the market wages that low-wage workers receive."

The most immediate difficulty facing the low-income is self-evident. As Jack Neo might say, “Money No Enough”. The WIS directly addresses this, by putting cash into people’s hands. It also increases their CPF contributions, which will be helpful in the longer term.

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But, Sir, it seems to me that the WIS does not adequately address the difficulties faced by informal workers and the self-employed. To qualify for the WIS, they must contribute cash. This will be very difficult for them. To compound matters, they will only receive contributions to their Medisave accounts. There are sound economic reasons for taking this approach. We have to avoid creating an incentive for those on the CPF system to drop out.

But let us go back to why the WIS is necessary in the first place. It is because the low-income are finding it difficult, if not impossible, to make ends meet. So how will asking them to make upfront cash contributions to their Medisave accounts address this problem?

Sir, it seems possible that many, if not most, of those in this group will not sign up for the WIS. Even though the amount of contribution required is low, even if they recognise that the Government is giving them a good deal, even if it will benefit them in the long run, I fear that the prospect of giving up much-needed cash will deter them from signing up. To be honest, it is not hard to understand why.

In a way, it is tantamount to penalising this already-struggling group: the ones that possibly need help the most are denied the full benefits of the WIS, and even have to reduce their disposable incomes to qualify. In our attempts to prevent wastage and abuse, are we inadvertently sabotaging the scheme and hindering it from achieving its objectives?

Be that as it may, we will have to work around this problem. To ensure that this group receives the help it needs, every effort must be made to educate them on the benefits of the WIS, and the procedure to sign up must be kept simple and fuss-free. Sir, I also think that there

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is room for expanding the scope of the WIS, to cover more people.

The Minister for Manpower has stated that the WIS is intended to help the bottom 15% of the population, and that helping more people will reduce the quantum of benefits available to each person. But let us put the figures in perspective. The WIS will cost the Government $400 million per year. This is half of the $800 million per year in lost revenues from the cut in corporate income tax; less than half of the $1 billion per year spent on HDB upgrading; a quarter of the $1.5 billion per year expected from the GST increase; and less than 4% of the $10.6 billion allocated to Mindef this year.

So there is room for the WIS to expand to more workers, after the Government’s review in 2010. There must be. I also hope that the Government will consider introducing additional credits for workers with children or parents living with them, as many of them will not benefit from child or parent relief.

Sir, after the Budget Statement, the Straits Times profiled a lady named Jenny Ong. With the WIS and the CPF changes, Miss Ong is expected to receive $52 more in take-home pay and $30 more in CPF every month. That represents an 8.8 per cent increase over her current monthly salary of $930.

But she owes $9,000 in rental arrears and $300 in utilities. That represents 113 months, or 9½ years, of this increment from the WIS. While the WIS will help, it will not make much of a dent in her huge arrears.

That is the enormity of the problem that we face. And so, the WIS as announced is only the starting point, and certainly not the finished product. Other measures, like training and upgrading, remain vital in helping the low-income.

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Housewives, homemakers and househusbands, and the unemployed

Sir, finally, I will touch on a couple of things that this year’s Budget did not.

Firstly, and here I echo several other Members here, it did not have anything for housewives, homemakers and househusbands. They do not work, so obviously they will not qualify for the WIS and will not benefit from the CPF rate increase. This could send the message that society does not value what they do.

Sir, I do not think that that is right. Even though more and more women are joining the workforce, housewives and homemakers continue to play an important role in today’s society. Househusbands play an equally important role. We should not ignore their contributions simply because they are difficult to quantify in financial terms.

I would therefore ask the Government to consider some form of tax credit or grant for unemployed parents, especially those without maids, whereby they will receive cash, or CPF, or a combination of both. Eligibility could be tied to the household income level and the annual value of the home. This will alleviate the burden on the sole breadwinner, while recognising the invaluable contributions made by stay-at-home spouses.

Secondly, the Budget had a lot for the low-income, but it had nothing for the “no-income”.

Sir, there was nothing in the Budget Statement on the unemployed, not even those who, for whatever reasons, are simply unable, and not unwilling, to obtain employment.

With rising costs, the unemployed require more assistance than ever. The

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impending GST hike exacerbates this, even with the offset package that has been announced. This House was recently told that the Public Assistance Scheme is being reviewed, and that an increase in the amounts payable is likely. This is good. But it is not likely to be enough.

While there are many existing assistance schemes, I had hoped to see something more. Given that this problem has persisted in Singapore despite the growing economy and despite the existing help schemes, the logical inference must be that the status quo is not enough.

Sir, at this point, I will just recall the incident last year where a gentleman committed suicide at a MRT station by jumping before a train. I do not think anyone in this House can imagine the kind of pressure and the sort of desperation that will drive a man to do this. He was unemployed, he had no money, I believe he had $16 in his wallet. He was saddled with a mountain of debt and that was his way out. I think, as a society, we have failed if we cannot help these people, if we cannot stop them in time before they take such desperate measures. I was therefore disappointed to see nothing in the Budget for this group. We can do more. We need to do more.

Conclusion

Sir, this year's Budget represents this Government's vision of how Singapore can continue to ride the globalisation wave to ever greater prosperity, while helping those who are unable to benefit from this growth.

Even as many have praised the Budget, others have found fault with it. Individuals have criticised the GST hike and the lack of a personal income tax cut. Employers have complained about increased costs from the increase in the CPF contribution rate.

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I do not think that all of the criticisms are unjustified. But it is in the nature of people to focus not on what they have, but what they do not have. There is no perfect Budget that will please everyone, and I believe that this Government is trying its level best to help those Singaporeans who need help the most.

It shows, in the introduction of the WIS, a drastic break with the conservative past and a brave step into the exciting future. It is a baby step, but it is in the right direction in how it addresses the problems of the low-income head on. This can only bode well for Singaporeans.

Sir, with that, I support the Budget.

5.57 pm

Assoc. Prof. Kalyani K Mehta (Nominated Member): Mr Deputy Speaker, Sir, I rise in support of the Budget Statement 2007/2008, in general, with suggestions for improvement. My focus today is on the Workfare Income Supplement scheme, re-examining the meaning of work. Most policy makers and economists tend to treat the words "work" and "job" or "employment" as synonymous. Therefore, when the statistics for labour force participation (LFP) are calculated, work that is carried out within a home is ignored. However, in some countries, the contributions of family-based workers are factored into the economic calculation.

I am heartened to see that the Second Minister for Finance, Mr Tharman Shanmugaratnam, has included a category of informal workers in the Workfare Income Supplement scheme. There are many ad hoc workers who do odd jobs and they are usually not receiving CPF contributions from the employers. In Budget 2007, these are to be treated as the self-employed and would benefit from WIS in the same way. The WIS is meant to help low-wage workers, targeting

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particularly older workers, and bring them under the CPF umbrella, and, to quote, "This will strengthen social inclusion in Singapore." At this point, I wish to add the Prime Minister's Chinese New Year message, that the family unit should be kept strong and healthy. PM Lee also expressed his concern, in the same message, of a growing number of elderly Singaporeans living alone.

Sir, I wish to ask the House to reflect on whether the WIS will inadvertently encourage more and more older people to live on their own. Let me explain. When an older person lives with the adult child, he or she is expected to help out in caring for the grandchildren. In middle class and upper class families, there may be a foreign maid to help the grandparents. However, in lower income families, the extra pair of hands is absent. On top of grandparenting duties, the elderly couple may have health problems or mental stress due to inability to discipline the young kids, conflict due to differences in views of how to supervise the children, how to control them, what food to cook for them and even language barriers often arise. In some households,

the adult children may not even give any pocket money to the older people and assume that, since they co-reside, they should be contributing by baby-sitting. I base my views on social research conducted on grandparents in Singapore.

Conflicts may propel the elderly couple to find peace in a rental flat, away from the friction of inter-generational ties. On the other hand, the sandwich generation may have work problems, financial squeeze in meeting the needs of the older and younger generations, exacerbated by GST hikes, and even issues regarding marital relationship. So, why do I say that WIS may, inadvertently, push more elderly to strike out on a path of independent living? If they manage to get some work, for example, at a hawker stall, or a cleaning job in a firm, they can

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benefit from WIS. This may be a more attractive option to living without any respect or gratitude from family members. Of course, this is if health permits and a kind employer is willing to give the lower-wage job to an older person.

Mr Deputy Speaker, Sir, my question is: why should a family member continue to care for an older spouse or grandchild if social policies actually encourage working for someone else outside the family? Here is where I want to ask the House to look at the broader meaning of "work". In one dictionary, the definition of "work" was stated as "exerting oneself mentally or physically for a purpose or out of necessity". If a family member is attached to his or her family and wishes to contribute by way of looking after grandchildren, the State does not recognise this as work. Perhaps it is seen as something he or she should do in old age. In some families, this selfless action is taken for granted. From a more positive angle, the contributions may be valued but, due to financial difficulties faced, there is no reward for the tireless efforts put in by the grandparents. Of course, where financial problems do not exist, the grandparents would be cherished and their efforts recognised by a fat hongbao at Chinese New Year.

We really need to address the key question here: is care-work to be recognised as work? If Singapore is to continue to witness families that are strong and healthy, it has to recognise care-work seriously. It is expansion of physical and mental effort for a purpose and, very often, out of necessity in poor families. Dr Lim Wee Kiak mentioned earlier about stay-at-home spouses. In this case, I am exploring care-work across different age groups. I want to give a few examples from my discussions with elderly Singaporeans who are involved in care-giving for family members.

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I know of one gentleman in his 50s who gave up his business in order to look after his ageing mother even though he had siblings. Why? Because he was the eldest son and he knew that his mother expected him to do the care-giving task as she was very sick. He even slept with her in the same room, as she needed help in going to the toilet at night.

Another example: I have talked to elderly women who look after their spouses who are reaching the "fourth age" or the age of frailty and dementia. Their other family members have no time to care, due to work and other commitments. Many of these older women are the spousal caregivers and they have little savings and almost no medical coverage.

Yet another example: I learn of the life situation of single daughters who have given up their jobs so as to care for their ageing fathers or mothers. They envy and sometimes resent their siblings who stay away because they fear that some of the caregiving responsibility will be pushed on to them. These singles would like to work but they know that the care of their ageing parents requires full-time involvement. For example, one parent had suffered from a stroke. These ladies shared with me their worries about their financial insecurity as they are in their 50s and getting near to old age.

These typical cases make us realise that the work done by the caregiver is equally important to work done in a job, and perhaps even more strenuous. It is highly unlikely to find a nurse to do the job and, even if such a person was found, it would be very costly. It has been reported in the Wall Street Journal of 20th March 2006 in the US that "If caregivers' work had to be replaced by that of homecare staff, it would cost a fortune, at least 45 billion dollars a year, according to the US Administration on Ageing, which is part of the Department

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of Health and Human Services." Family caregivers of frail elderly, persons with dementia or Parkinson's Disease, people with physical or mental disability are saving the State from bearing the lion's share of economic and social costs of an ageing population. Similar statistics for Singapore are not available currently, but we can assume that many thousands of dollars are saved when altruistic family members assume the responsibility of care for the sick and disabled.

My focus today is on the poor family caregivers, as the better-off can fend for themselves. In the bottom 20% of the economic ladder, the family caregivers are not benefitting from any of the incentives, such as aged parents, tax relief, waiver of foreign maid levy or grandparent caregiver tax relief. They have to continue paying for health expenses of their care recipient, who may be a parent or grandparent, and Medifund is not easily available for the elderly who have adult children. Indeed, in some ironical way, we sometimes penalise the elderly who have unfilial adult children because public assistance is more easily accessible to the poor single unmarried elderly. So, on the one hand, we encourage people to have more children but, on the other hand, it is very ironical that people who are single have easier access to financial assistance.

Someone can argue that there are voluntary welfare organisations that such families can go to for help, such as financial assistance from CDCs can be sourced. My answer is that such assistance is short term and is inadequate. On top of it, the VW assistance is not a recognition of the work that the family caregiver does. In a family-oriented society such as Singapore, care-work done by family members should be praised openly and rewarded so that the tradition of family members doing physical and mental care-work will continue into the future. Social research has documented that in those societies

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where concrete measures are taken to support family caregivers, they are better able to continue their care-giving roles and functions, and earlier speakers have mentioned about some countries in Europe and so on.

One more important point is that many unmarried daughters and sons are primary caregivers of older parents. If we just stop to think for a moment, when their Medisave is literally wiped out looking after their ageing parents, who will care for them? Again, my concern is for the lower-income, low-skilled middle generation caregivers. If, ideologically, we recognise that care-work is a form of work, then, administratively, it would not be difficult to create a sub-category under "informal workers" in the WIS scheme that supplements their income in the same way as the self-employed. Some may have a CPF account, whereas those who do not have one can be incentivised to create one. So, in the long term, they would be able to draw on their Medisave for medical expenses in old age. Statistics could be obtained from the Department of Statistics on the bottom 20% families and, within them, the non-working family caregivers could be identified using manpower from grassroots organisations as well as VWOs. As with the Progress and Workfare packages last year, flyers could be sent to them, and they could be recommended to seek help from CDCs and FSCs in filling up their forms.

The nitty-gritty of how to peg the value of their work, that may come up in the minds of many policymakers. My suggestion is that we could equate the value of their work to how much a homemaker or home helper would be paid for the same amount of work in a day of seven hours. If a private home helper is paid $10 an hour, then the value would be $70 a day. The total would be about $1,400 a month, calculated on a five-day

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working week, although we all know that caregivers do work seven days and not just five days. So, based on such estimates, the WIS would be applicable. Of course, once the primary caregiver joins the workforce and, if the pay is higher than $1,500 per month, the WIS could be terminated. Another way to calculate would be to examine how much a home helper employed in a VWO is paid. I rang up a few organisations and I found one information from one organisation which said that they pay home helpers $1,000 a month. Divided by 24 working days - they work six days a week - it works out to $41.60 per day. This is substantially lesser than the private home helper. This is one way by which we can estimate how much non-employed family caregivers contribute in economic terms and their eligibility for WIS.

Just to have a brief ratio of how many caregivers are employed and how many caregivers are not employed, the National Survey of Senior Citizens in 1995 showed that 43% of family caregivers were employed and 59% were unemployed. So, to sum up, the non-working primary caregivers above the age of 35 years in poor families need some form of safety net that offers them social security as well as dignity when they age. They could be spouses, adult children or grandparents. Including them into WIS will be a concrete gesture and not just rhetoric on the part of the Government that filial piety as well as family care-giving is a value that is to be recognised and treasured in our society. As we watch what has been happening in neighbouring countries, eg, Japan, where a significant number of elderly live alone, we should learn that family caregivers who co-reside with ageing members need the State's concrete recognition and support.

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In my view, it is the right time to include this group of informal workers within the newly-designed WIS scheme, for it has been far too long that they have been ignored and their contributions taken for granted. By topping up their Medisave, these care workers in the family will be encouraged to continue their role. The goal of social inclusion that I mentioned right at the beginning would be more comprehensively met in this way. As a professional social worker as well as someone who is concerned about the state of families within a fast ageing society, in my view, such a Government policy will signal to all Singaporeans that the care-work done within families is important to the nation. Some of the earlier speakers have also made reference to the subject, so I think there are some sentiments in the House that this is a topic that we need to look at more carefully.

Sir, I request Mr Tharman Shanmugaratnam and the rest of the House to seriously consider this recommendation and to take necessary steps to revise the WIS.