EXEMPTED BUSINESS

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EXEMPTED BUSINESS:

(Motion): 6.14 pm

Resolved,

That the debate on the Budget Statement be proceeded with beyond 7.00 pm and the proceedings thereon be exempted at this day's sitting from the provisions of Standing Order No. 91(3). - [Mr Mah Bow Tan].

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ANNUAL BUDGET STATEMENT: Debate resumed.

Mdm Halimah Yacob (Jurong): Mr Deputy Speaker, Sir, our unionists have roundly applauded this year's Budget as generous, fair and humane - very pro-worker and far-sighted, balancing well

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both the economic and social needs of our society. The GST credits, CPF increase, the WIS and Senior Citizen's bonus are but some of the very substantial measures that the Government has introduced to help low-income workers affected by globalisation and all Singaporeans who are affected by the GST increase. Some of our unionists even described it as the best Budget that they have come across thus far - and we thought that maybe Christmas came early, and we had Christmas goodies - and have complimented the Government for coming up with such a Budget. But many also find the Budget confusing and not easy to understand and have asked that the Government do more to help communicate the message in simple terms to the population.

Sir, this is also the first Budget in Singapore's history to provide for a wage supplement, something that was not considered feasible in the past, but which is now necessary because of drastically changed circumstances. Globalisation has seriously affected the wages of our low-skilled workers, so there is a need to mitigate this impact. But the Budget is not just about wealth redistribution, as it also addresses the need to invest in our future to make our economy more globally competitive and our city more vibrant and lively. Hence, there are many measures to bring Singapore to the next level so that we can become a "first-world nation", to quote MM Lee.

While we welcome this generous Budget, there are also concerns whether it will be sustainable, as schemes like the WIS, once implemented, cannot be withdrawn so easily. Nevertheless, Sir, I think that there is no danger of Singapore over-spending as our past expenditure at about 15% of our GDP is the lowest in Asia compared to government spending elsewhere in the region, which ranges from about 18% of the GDP in the Philippines and Hong Kong to 20% of the

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GDP in Malaysia. Now that we are at the stage of our development where we have accumulated enough reserves, it is prudent to consider a higher social expenditure.

Mr Deputy Speaker, Sir, we know that the 2% GST increase is certainly not a popular move and coming so soon after the 2004 increase was also unexpected. But many people agree that the generous offset package will help, particularly our low-income earners. There are also strong economic arguments for the need to broaden our tax base and shift more towards a consumption tax rather than through direct taxation alone. As Andy Mukherjee, a Bloomberg News columnist, argued, "Singapore is not a natural home for companies. It does not have deep consumer and labour markets or energy and mineral resources. It must compete based on the cost of doing business, a category in which the World Bank ranks it at the top of 175 economies. This advantage is not permanent."

Hence, this decision to move towards a consumption tax is not a decision that was taken lightly and if in the long run, it would help to make our economy even more competitive and create more job opportunities, then it is in the best interest of Singaporeans. As one of our unionists said, for workers, the logic is quite simple. We must first have jobs before we can talk about consumption and paying a tax on our consumption. If there are no jobs, there is no consumption to talk of and there is no need to worry about GST.

Sir, I welcome the Government's decision to freeze all Government fees for a period of one year. However, I notice that hospital and polyclinic charges are excluded from the list and I hope that the Government could also assure Singaporeans that these charges will not be increased this year as some are

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concerned that this might happen. As healthcare is a necessity, I urge our public sector hospitals and polyclinics not to raise their fees this year.

I would also like to urge hawkers and businesses not to take advantage of the GST as an excuse to increase their charges as I have received feedback that this is already happening. A grassroots leader told me that her daughter's tuition centre increased its fees, citing the GST increase as the reason. Perhaps, the Government could reactivate the Committee on Profiteering (CPI) which was previously established to look into complaints over profiteering. I am glad to note that our NTUC cooperatives are doing their part to help Singaporeans by absorbing the GST increase. NTUC Fairprice, NTUC Foodfare foodcourts, NTUC Childcare and NTUC Learning Hub will be absorbing $5.1 million in GST, and NTUC Fairprice will also provide $1 million worth of shopping vouchers for the needy to purchase essential items. I hope that more traders will emulate the example of these NTUC cooperatives and play their part to keep prices stable.

Sir, listening to the Second Finance Minister unveil the Government's plans for the next few years, I think Singaporeans have every reason to be optimistic about this year's growth and our future. The job market continues to remain tight and based on feedback we received from our unionists, many companies are suffering from staff shortages. But globalisation will continue to exert downward pressure on the wages of the low-skilled workers and we have to guard against marginalising our low-wage earners.

Unionists worldwide, Sir, remain concerned about globalisation and the divisions which it creates. They feel that the pressures of globalisation are being borne disproportionately by labour.

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According to a recent UN report, "stiff competition under increased globalisation has led to reduced job security, a reduction in job-related benefits and the diminished role for labour". It further added that worldwide unemployment has increased significantly since 1995 - despite robust economic growth averaging 3.8% annually in the last decade and at 16.5% increase in the number of people with jobs. This trend is supported by the International Labour Organisation (ILO) report on Global Employment Trends which highlighted that the boom in East Asia has widened the income gap. It noted that "inequality has arisen, not just in income levels, but also in schooling and access to basic services". In South East Asia and the Pacific, the unemployment rate stayed steady at 6.6% last year. However, the report said that 59.6% of the region's workers had family incomes of less than US$2 a day.

Sir, in many countries, we see two races taking place: one to the top for the better endowed and the other to the bottom for the less fortunate. Is this a sustainable development? I do not think so. At some point, the tension and conflict that it will create will boil over and everyone will lose.

So, we are doing the right thing by pursuing a different path - supporting globalisation strongly while ensuring that everyone gets a helping hand to move up.

But, herein, lies the paradox. Even as government extends a helping hand to the lower-income, it must manage new tensions that could emerge in terms of how the other segments of the population, specifically the middle-income, will view such initiatives. When I was in Germany a few years ago, I talked to members of think tanks about the pressures faced by Germany arising from rising pension costs. Many agreed that adjustments are needed but disagreed to the dismantling of the system. There is a

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higher degree of consensus on inter-generational cross-subsidisation to sustain the pension fund. Hence, even the young accept some of the burden of caring for the old in their midst as theirs is not a defined contribution but a defined benefits system which transfers the cost of paying for the pensions of the current old to the current young. In Singapore, I do not think we have such a high degree of consensus. Under the CPF system, each one must take care of himself and his future by contributing to his own fund and this is something which is deeply ingrained. Hence, it will take some time for us to accept the fact that there are Singaporeans who, no matter how hard they work, will not be able to earn enough to provide for current and future needs and, therefore, they need more help from the Government. So these are tensions which the Government must manage very carefully, but, as Singaporeans, we too have a role to play.

At the end of the day, we should all view ourselves as Singaporeans. And if one segment of our population is left behind, over time, it will affect everyone.

Let me now, Sir, come to some specific aspects of the Budget.

On CPF

Mr Deputy Speaker, Sir, unionists are very happy that the Government has accepted our suggestion to raise the CPF and to phase in the Medisave payment for the self-employed and casual workers. This shows that tripartism works and the Government values the inputs of the labour movement. Workers have sacrificed during bad times, so it is timely for the Government to raise the CPF when our economy is doing so well. And the Government has not forgotten the employers, who will be getting a 2% reduction in the corporate tax rate which is higher than the 1.5% increase in the CPF. So I am a bit surprised to hear that

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there are employers who are unhappy with the CPF increase. I hope that employers will see their workers as their stakeholders as no company can operate profitably unless their employees are properly motivated. Let me add that our workers see themselves as stakeholders and that is why they accept wage cuts when times are bad and expect to be amply rewarded when times are good. In fact, we received delegations overseas many times often and one of their comments is that they really do not understand how Singapore could quickly adjust its costs in bad times and get workers to accept a cut in the CPF rates. And they do not know how we could do it. But we could do it because, primarily, the labour movement has the trust of the workers and also because the Government also has the trust of the people and the Government delivers on its promises.

Sir, there are other significant changes to the CPF in this year's Budget. First, the linkage between Workfare and CPF/Medisave has reinforced the basic role of the CPF to meet the retirement and healthcare needs of workers, something which has been weakened over the years.

Second, with these changes, in my view, there is now less scope for using CPF as a tool to adjust wage costs during bad times. Workers need to build up their CPF savings to meet long-term needs and this should not be subject to the vagaries of short-term adjustments to help companies manage their wage costs. In fact, for those earning less than $1,500, the CPF rate for employers has already been adjusted downwards. So there is little scope for further reduction during bad times without affecting workers' savings for retirement and medical. So employers need to really focus and make sure that the flexible wage system works to meet changes in their company's performance or in the economy. I hope

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that we do not hear calls for more cuts in the CPF during bad times.

WIS

Mr Deputy Speaker, Sir, our unionists also strongly support the Workfare Income Supplement (WIS) as a bold and innovative scheme to help the low-income level up, but without eroding their work ethics. It will make our job a lot easier when we encourage workers to work even in the low-wage sectors which up to now are still dominated by foreign workers. However, there are a couple of observations that I would like to make with regard to the WIS.

First, the WIS is pegged to income and age levels but does not take into account the family size of the low-income worker. Hence, a low-income worker who is a bachelor receives the same amount as another low-income worker with a wife who is a housewife and has children to feed. I would like to ask the Government to consider whether it is possible to provide more to low-wage workers with families as they are in greater need of financial assistance.

The second point is that the Government has said that the scheme will be reviewed only after three years. If we want the WIS to be effective as an instrument to supplement wages, the amount, in my view, has to be reviewed yearly to ensure its adequacy and to ensure that it keeps pace with inflation.

I suggest that the Government review the scheme yearly instead of waiting for three years before doing so.

Third, Mr Deputy Speaker, Sir, our unions have voiced the concern that the WIS may not reach the very group that we want to help, that is, the casual workers. Many casual workers are paid daily and they may not save enough at

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the end of the month to contribute to their Medisave, as they usually spend whatever they earn. But I want to make an important distinction here from the position taken by Mr Low Thia Khiang. The decision to link WIS to Medisave is a crucial and important one and, unlike Mr Low who thinks that this shows a lack of sincerity on the Government's part, I believe, to the contrary, that this shows how much concern the Government has for the plight of the low income and the casual workers.

I work extensively on the ground among workers from all sectors - public, industrial and service - and I have seen the grave hardship that these workers without Medisave or CPF face. We spoke to many of them - in the cleaning industry, in the construction sector, in the other services sector - and their sense of insecurity and fear is real. Why are the casual workers so concerned about falling sick, retiring from work or, if they are sole breadwinners, they were to die leaving behind their dependants? The reason is very simple. In Singapore, housing, health and retirement are all tied to the CPF. We use our CPF Ordinary Account to purchase our homes. We use our CPF Medisave Account to pay for our medical bills and we use the CPF Special Account to provide for our retirement. Everything is linked to the CPF. So what will happen to those casual workers without CPF? How are they to buy a home, pay for their medical bills or plan for their retirement? Last year, 120,000 Singaporeans who claimed the Workfare bonus did not contribute to CPF. Is Mr Low suggesting, Sir, that we should increase this number because that is precisely what will happen if we do not have this WIS/Medisave/CPF linkage? The existing low wage workers who are contributing to Medisave will then decide that they want even more take home pay and opt out of the CPF. If this were to happen, I believe, having witnessed the hardship of the workers, it would be disastrous for us and social

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exclusion will become even worse in Singapore. So, Sir, this linkage is important but the Government needs to do a lot of outreach programmes at the community level to educate our casual workers on the importance and the benefits of contributing to the Medisave.

Sir, I would also like to urge the Ministry of Manpower to step up efforts to enforce CPF payments among contract workers. In his reply to the question I filed in Parliament on CPF contributions for contract workers, the Minister for Manpower acknowledged that for contract workers, monitoring of CPF payments is more difficult. He further explained that the CPF Board regularly audits employers' CPF payments and wage records, especially if they belong to such high default industries such as cleaning contractors and security agencies. Sir, according to MOM, 12% of our workers work part-time or are in temporary employment. The potential for this problem to grow is there. So I would like to ask MOM to enlighten this House on what measures will be taken to ensure that employers of contract and casual workers pay CPF, as otherwise the WIS will not achieve its objectives fully. Such workers are usually unlikely to complain against their own employers for fear of losing their jobs, as there is nothing to protect them against termination by errant employers. I have spoken to some of these workers. They showed me their payslips. It showed the salary and other components but no CPF, and I asked the workers, "Do you want us to take it up?" They said, "No, because if I were to lose my job, then it is going to be difficult for me to get another job and there is no protection against losing this job that I am having right now." So I would also like to urge the Ministry of Manpower to step up educational efforts so that contract and casual workers know what their rights are and would minimally contribute to Medisave themselves to qualify for the Workfare bonus.

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On cheap sourcing

Mr Deputy Speaker, Sir, the problem of contract workers is complex and it is primarily caused by cheap sourcing. When companies go for the lowest tender, it affects the behaviour of the contractors who begin to tender lower and lower in order to secure the contracts. After tendering low, in order to survive, they cannot squeeze anything more from their rental of premises or from their equipment or chemicals. So they squeeze the workers and pay them very low pay with no benefits provided under the Employment Act and no CPF. This situation is not sustainable and I urge employers who outsource to behave responsibly and go for best sourcing instead of cheap sourcing, a constant refrain of the NTUC. Companies should also put in place a system to monitor the performance of their contractors through regular auditing and through relevant clauses in the contracts to ensure that they pay their workers CPF and other benefits provided under the law.

Lowering of the second tier foreign worker levy for manufacturing and services

Sir, let me now come to the lowering of the second tier foreign worker levy for manufacturing and services. The second tier foreign worker levy for the manufacturing and services sectors has been reduced. While I understand the rationale for this, I would like to urge the Government to closely monitor the situation as such a move could make foreign workers even cheaper to employ. I urge the Government to review this foreign worker policy regularly so as to calibrate the supply with the demand, so that we do not end up with the displacement of Singaporeans. With the increase in the employer's CPF contribution rate, I hope that the reduction in the foreign worker levy will not make foreign workers more attractive than

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Singaporean workers. The mechanism employed to control the influx of foreign workers is through the quota and the levy. Last November, the Ministry had announced that the quota for foreign workers would be made more flexible. Hence, the only other control that exists is through the levy and if this is weakened, then we may end up making foreign workers so much more attractive than local workers, something that we must guard against.

Increased healthcare expenditure

Sir, let me now touch on healthcare expenditure. I welcome the increased budget allocation for healthcare but I wonder whether it is sufficient as our population is ageing very rapidly. The Minister for Finance has said that an additional one billion dollars will be allocated over a period of five years from now to 2012. Currently, the percentage of public sector expenditure vis-a-vis private sector expenditure is declining, which means that individuals are paying more of their own healthcare costs. I was hoping that the Government would be even more generous in its budget allocation to health, considering that our population is ageing so rapidly and chronic illnesses have increased significantly. I do not expect us to reach the levels of the US where expenditure on health at 16% of the GDP is the highest among the developed countries but, in terms of results, it is not commensurate with the amount spent as 45 million Americans are uninsured. I was hoping for a more generous allocation although I must say that its increase in budget allocation is also a welcome increase.

Sir, I welcome the topping up of the Medifund as the demand for assistance will continue to grow. In 2005, for instance, $39 million was disbursed, the largest sum that the fund has handed out

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since its establishment in 1993 and a significant 20.9% rise from the $32.3 million given out in 2004. And to its credit, in 2005, the fund only turned down 0.1% of the applications, mostly because the patients were deemed capable of paying their bills. However, I would like to urge the Government to make the Medifund more flexible so that people who earn more can still tap it if need be. I have a middle-income couple living in my constituency whose little boy suffers from leukaemia. The family does not qualify for Medifund but the family is already in debt from paying for the boy's treatment for leukaemia. And I have another case where someone wrote to me and this person and two of her sisters are supporting her brother who has been hospitalised in IMH for 20 years and their Medisave account is dwindling very fast. But they are also not eligible for Medifund because they have savings available. So, Sir, it is such people at the margin who need help and I hope that the Government will review this and give greater flexibility so that people who really need it will not fall through the safety net.

I support the senior citizens’ bonus for those above 55 years, with most of it going to the Medisave. It is a good idea as many senior citizens do not have enough in their Medisave accounts and their major worry is healthcare bills. Over the last few years, Sir, I must say that we have seen a lot of positive changes taking place in healthcare and this has tremendously benefited Singaporeans. The system is not perfect and further refinements are needed but, at least, the problems are being fixed.

I welcome the most recent changes announced by Minister Khaw to increase the withdrawal limits and allow Medisave use for outpatient CT and MRI scans, if these form part of the treatment. The ElderShield scheme has also been reviewed and the Minister has announced that the coverage period will be extended

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to six years and the amount increased to $400. While I welcome these changes - certainly these are good improvements - I am also of the view that the Ministry should also consider reviewing the qualifying criteria for the scheme. I have received many feedback that the current criteria which require an elderly person to suffer from three disabilities, like not being able to bathe, not being able to walk or not being able to eat, are too onerous. Hence, it is necessary that we consider increasing the payment and extending the coverage period. Sir, I would also like to urge the Ministry to look at ways of helping those who are not currently covered under the MediShield scheme to be so covered, in particular whether the Ministry of Health could consider introducing an opting-out scheme for MediShield for spouses who are not covered as well as children of those who are covered under the MediShield, ie, children of CPF contributors, because this is a major worry as the MediShield scheme is indeed a very important scheme and for major hospital bills, it is important that everyone is covered. So an opting-out scheme should be one consideration that I hope the Ministry would consider.

Sir, I would also like to stress that although the WIS has become a permanent scheme, nevertheless, the best future for our low-income workers is for them to graduate out of the WIS and move into higher value-added and better-paying jobs. The WIS should act as a channel through which low-wage workers will get temporary relief until they move on to a better future. Indeed, I would be very sad if large numbers of our present cohort of low-wage workers continue to remain on the scheme, let us say, five years or 10 years from now.

In conclusion, Sir, this is a Budget that I am happy to support. This Budget has given us a greater sense of confidence in our future. While this Budget cannot

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promise that there will be equality of outcomes for all Singaporeans, as that depends a great deal on individual motivation and effort as well, it is, nevertheless, trying to give more equal opportunities to those who strive hard and wish to succeed.

I hope that all Singaporeans will support this Budget, not just the dollars and cents but, more importantly, the principles behind it that we need to work together to grow Singapore and to help each and every Singaporean find a place in Singapore.

Do I have time to make a Malay speech, Sir?

Mr Deputy Speaker: You have 30 seconds.

Mdm Halimah Yacob: ( In Malay ): [For vernacular speech, please refer to Appendix A.] Sir, the Budget this year is a special one, not only does it fully focus on the problems of low-wage workers and help them through various measures such as the Workfare Income Supplement scheme because they have been acutely affected by globalisation causing their wages to decline, but, more importantly, the Budget urges Singaporeans to think globally.

*Cols. 1769-1770.

6.50 pm

Mr Yeo Guat Kwang (Aljunied): ( In Mandarin ): [For vernacular speech, please refer to Appendix A.] Sir, this year's Budget is clearly a strong boost to our economy; it will drive our economy forward and enhance employment opportunities. Many say it is great, it is generous, a lot to offer and very comprehensive. And they say it is detailed but yet it is also very complicated. It seems that this is a popular view among many people. So we need to improve the understanding of the people about this Budget.

*Cols. 1771-1782.

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The Budget is a great boost to our economic development. It will enhance our employability and strengthen our job security. It is an economic watershed and it creates a new milestone. But many people have concentrated on the second part - the subsidies and supplement packages; as such, they have overlooked the first part of the Budget about how to promote our economic development, to ensure that it can be sustained. It is just like what our Minister said that the main focus is to strengthen our economy, so that our life will be better, and our pie will be bigger. So it is not just to distribute the pie only. We hope to make our economic pie bigger, so everybody can benefit from it, not only now, but we will benefit from it continuously into the future.

As we all know, only when our economic development is being sustained and maintained between 5% and 7%, then our employment rate can remain at a high level. The revision in employer and employee CPF contribution rates for older workers is a good move towards achieving this end. And this is a good vision for us. This is also about the four pillars of our social security net and to provide good security for our people. It can effectively encourage our low-wage workers to stay employed, and as the saying goes, we are not afraid of earning less but we are afraid that it is distributed unequally.

As we can see, the income gap is becoming wider and wider in many countries. In the wave of globalisation, we must narrow the income gap. It is a very great challenge, a difficult task. And we cannot stop those high-income earners benefiting from it. But we cannot let the wages of our low-wage workers remain low or even decline. So our labour market is just like a shopping market. If the foreign market can offer cheaper goods,

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we will just shop elsewhere. Similarly, if the foreign country has a lower labour cost, it will attract all the investors to their country. Therefore, we cannot follow other countries by setting a minimum wage law. For example, recently, the Philippine government raises the minimum wage to US$400. As a result, a lot of local families cut down on their demand for Filipino maids. It resulted in a 60% decline. It is an obvious example. We must learn from this.

What we need to do is to raise the productivity of our low-wage workers. That is more pragmatic. Therefore, the unions and employers will try to raise the productivity of our workers through the skill redevelopment plan and the job redesign plan. However, some low-skill industries are facing the pressure from China and Vietnam. Our income has been declining. For the low-wage workers, the WIS comes in timely. It is divided into two portions, the cash portion and Medisave portion. It is a very good scheme. However, some people give us negative feedback because they think that it is not fair to set the distribution benchmark based on the $1,000 to $1,500 income category. Instead, they hope that the Government will consider using the household per capita income as a benchmark. WIS is a very good policy but if you do not have any job, you cannot enjoy the benefit under WIS. So we must help our workers, including our housewives, to stay employed. In our country, we hope that IR and all other projects can provide more job opportunities for our workers. We hope that this will not only benefit the foreigners, it will also provide jobs for our own people.

In Singapore, the employment rate of older male workers aged 60-64 years has increased from 49% in 1996 to 63% in 2006. This is only second to Japan, Korea and Sweden. And we are much better

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than Hong Kong, Taiwan and Northern America and Western European countries. Those aged 50 years and above make up 24% of the total labour market, but 68% of these people are elderly who are mostly in lower-skilled and lower-paid jobs. In Singapore, the employability of women aged 25 to 64 years is not as high when compared to other developed countries. This is so because women tend to resign after child birth, not because they do not want to work, but because there is a lack of job flexibility as well as part-time work available for them. So they cannot continue to work at the same time while taking care of their family commitments. Therefore, we must have a better employment structure, and to create more flexible job opportunities for them while rolling out this WIS. Even NTUC and the employers must cooperate with the Government and support the Government, so that we will provide more jobs for our people and to enable them to enjoy WIS. One good example would be Old Chang Kee. The industry can learn from Old Chang Kee and other established industries to provide suitable jobs for our elderly people.

Sir, the medical expenses have been a concern for many people. A lot of people have requested our Government to exempt medical bills from hospitals and polyclinics from GST. We have this 3M framework which is a social security net for our people. However, I want to emphasise that, first of all, we must let everyone understand how 3M works for us and what its benefits are. A lot of people are still not aware of the benefits of this 3M. In this regard, I hope MOH will strengthen public awareness and educational efforts, so as to make this information more comprehensive to the people. Figures released by MOH in 2005 showed that about 23% of our people are not covered under this 3M. I hope MOH will work with NTUC, the Consumers Association and the Insurance Association in stepping up public education on the

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importance of a medical insurance scheme, and also to hear their views about medical insurance services.

Today, many people who are self-employed are requested to make contributions to their Medisave account. Ideally, it should be implemented on a monthly basis, rather than on a yearly basis. In addition, I also hope that MOH will consider including housewives under the 3M system. We must also encourage the young workers to learn about the importance of the 3M scheme, so that our people will start to plan for their medical needs as early as 18 years old. The middle-aged people, once they suffer from chronic diseases, will benefit less from the medical scheme because they will not be eligible for the medical schemes or may get less in coverage. For this particular group of people, we must come up with an appropriate scheme for them, so that they can receive better benefits and coverage under the 3M scheme. Also, it is important for MOH to encourage those above 45 years to go for regular medical checkup.

Sir, competition among countries is not only measured by our so-called business environment employability and high technological level, it is also measured by the physical fitness level of our people and quality standards, ie, whether they can do their job well. According to a report, our diabetes patients have increased from 4.7% in 1975 to 8.2% today. And the patients are getting younger. Therefore, it is necessary for MOH to allocate more resources into this area, to implement health programmes to help people maintain their physical fitness and state of health, and help them to plan in advance. Otherwise, these chronic diseases will increase family burden and social costs. We need to invest in our health. This is more important than the medical system.

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According to a recent happiness index survey, Singapore was ranked high as an ideal country suitable for living, free from sufferings. The question is, therefore, how we can help Singaporeans to face the challenges of globalisation and, at the same time, remain optimistic and have a strong faith, and let them enjoy their physical and mental health. This is more important than the Government's policy of giving out bonuses. I hope our Government will encourage the SMEs to educate their workers of the benefits of Medisave.

Also, the Government has announced that corporate tax rate be reduced to 18%, and all the startup companies can get their tax exemption amounting up to a hundred thousand dollars. This can improve our SME's competitiveness. I hope the Government will also review the personal income tax rate of the lower income group, so that they can also benefit from this economic pie.

Another scheme is our HDB Home Ownership Scheme. This is something that we are proud of. This is a social security net that every household can share. Even though our people may lose their job temporarily, they may not end up like the occupants in the movie “72 tenants” being homeless. This is a very important social security net. We have to ensure that our people will not lose out on this security net under the impact of globalisation. According to a 2003 HDB household survey, about 14.5% of households and families have downgraded from big flats to small flats. However, HDB loan schemes do not provide them with any financing. I hope the Government will review this constraint. According to the survey, our commercial banks also require the loan amount to be $100,000 and above. Therefore, this low-income group of people cannot obtain bank loans when they downgrade.

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Besides that, HDB has built 2-room flats in Sengkang. The first batch of 90 units attracted about 266 applicants. It means two-thirds of the applicants cannot get their flats. From this, we can see that small flats are welcomed by the people. I hope that HDB will continue to build more elderly flats and small flats, so that everybody will have a roof over their head. I realise that HDB has stopped building elderly flats. We hope that they will continue to provide this sort of small flats for the elderly so that they can enjoy this social security. I hope that our Government will understand the people's needs and map out the necessary policies accordingly.

Sir, in order to ensure that our country continues to develop, we have to invest in our future. We must help those people from the low-income group. Our Government allocating more funds to help them is good news and it is even considering using our reserves to allocate more money to help these people. I believe this fund should be invested in our family units. In addition, I am very pleased to see that more people are benefiting from the post-secondary education account. Our Government has allocated $400 million to implement the post-secondary education account, as well as to provide the low-income group with a kindergarten subsidy of $80 per month. For those children who are under the childcare subsidy plan for low-income families, they will each get an additional $20 to $40 per month. It is very meaningful. However, regrettably, our mainstream education only starts from Primary 1, and not from kindergarten or pre-school education. As a Chinese idiom goes, a person's whole life is determined at the age of three. Therefore, it is important to give them a good headstart.

Our country has 160,000 foreign maids. It implies that we have not placed enough emphasis on pre-school education. We have about 720 childcare nurseries

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and 500 kindergartens, but about 50 to 60 of them close down every year. This is due to unattractive salary package for the teachers. As such, they have difficulties attracting qualified people to join this industry. Also, there are not much future prospects and the pay is very low. For the parents, they complain that the $560 monthly fee is too high. During school holidays, the kindergarten is closed, but they still have to pay the kindergarten fees. As a result, this has an impact on our birth rates; it also lowers the employment rate of women.

So I suggest that the Government include this pre-school education into the mainstream education, to provide more subsidies to the pre-school nurseries and kindergartens. For example, in Hong Kong, the government supports these kindergartens. Their government provides $2 million per year to help enhance the quality of pre-school education and facilities. They lower school fees, give extra subsidies, and make sure that the teachers are highly qualified. In China, the government also subsidises heavily on nursery education and the kindergartens are given utility subsidies, rental reliefs, etc. Because the government is in charge of overall masterplanning for the nurseries, they are thus able to extend subsidies to the kindergarten operators. This helps kindergarten operators to lower their costs. As a result, nurseries are able to charge a lower rate of fees. For instance, in Fuzhou city, government rules require that there must be at least 12 kindergartens or nurseries per 6,000 people. In Beijing, for construction of residential projects including non-profit kindergartens, the operator will be given the right to use the land.

I urge that our Government can learn from these countries, import their knowledge and experience in masterplanning of nursery facilities. Making pre-school and childcare centres more affordable will help encourage

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mothers to seek employment and increase birth rates. These housewives can take up full-time jobs or flexible part-time jobs, and this will help to ease the labour shortage in the market.

As an Asian society, it is important that we strengthen the cohesiveness of our family and society. This is very important. Globalisation is here to stay, and the family, being the cornerstone of the society, is subject to great impact. Divorce rates increased markedly, and some lonely elderly people are also waiting for the society and the family to care for them. According to New York Times, structural changes are occurring in China cities and villages, where many young people are moving out of the village to work in the bigger cities. About 80% of the elderly people above 60 years of age, out of a total of 147 million people, remain in the villages; nobody cares for them, nobody looks after them. The Confucian philosophical tradition of respecting the old and caring for the youth is gradually eroding, and no longer plays a central role. We do not want to see the same thing happening in Singapore. But in our country, it is not optimistic either.

According to an NUS survey carried out from 1991 to 2000 on 712 elderly suicides, those committed suicide are aged 65 and above, ie, the older they are, the higher the suicide rates. The Chinese elderly have the highest suicide rates, followed by Indians and Malays. Results of the survey also showed that the Malay community has a higher degree of family cohesion. Even though they do not know their neighbours, they will still help one another. This is something lacking among the Chinese community. An NUH survey showed that depression is the main cause leading to suicides among the elderly. Because their children are busy with work, they have less time to communicate with their parents. As a result, it is much easier for them to slide into depression.

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One of the biggest challenges faced is the ageing of the population. The elderly people need to be cared for by the Government, the society and the family members. We must continue to revise our policy, so that we can provide job flexibility, medical subsidies and incentives, and help set up senior citizens centres and old folks' homes. I urge that the Government allocate funds for training professional social workers, so as to provide quality eldercare, as well as a wide variety of services for senior citizens. In Hong Kong, the government has in place systematic eldercare services, something that Singapore can learn. I hope that our country will also have this kind of scheme to help the senior citizens and to build a happy home for our elderly citizens.

Sir, I support the Budget.

7.10 pm

Mr Christopher de Souza (Holland-Bukit Timah): Mr Speaker, Sir, for a number of years now, we have been observing the impact of the widening income gap. Even as the luxury private property sector picks up pace, the benefits do not seem to trickle down as quickly and a substantial number of needy Singaporeans need help to catch up.

The Government is right to focus on growing our economy. This increases the economic pie for everyone. Our economy grew by a healthy 7.9% last year. A record number of new jobs were created, unemployment went down and workers enjoyed good wage increases. So it is timely and appropriate that this Budget is more focused on helping the most vulnerable segment of our population - the older workers and low-income earners.

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Workfare Income Supplement and Medisave

The first point I would like to touch on in this speech is Workfare Income Supplement, or WIS. Sometimes it is hard to accept that in a bustling, prosperous city like Singapore, there are people, some self-employed or contract workers, who earn so little that they can barely make ends meet, let alone save for tomorrow. I have my reservations about requiring the self-employed and informal workers to make contributions to their Medisave accounts before they are eligible to receive Workfare. While any contribution from the Government is greatly welcome, the fact is that some of these workers are so cash-tight, they have immense difficulties making Medisave contributions. So it is more likely that they will not contribute to their Medisave and, thus, miss out on WIS benefits, which is a real pity. This would prevent them from graduating out of the lower-income group.

I also have concerns about the policy of contributing the entire amount of Workfare for the self-employed and informal workers into their Medisave accounts. Given that these workers could have immediate and pressing needs, Workfare in the form of partial cash and partial Medisave would be more useful.

I am aware that the policy behind Workfare is to encourage the target group to work, and to work consistently. This is a policy that I fully support. However, I appeal to the Government to consider changing the eligibility criteria for Workfare for this group of workers. Instead of linking it to whether they make Medisave contributions, perhaps the workers could instead provide some form of proof that they have been working consistently. I would also appeal to the Government to consider giving them a portion of Workfare in cash, instead of it being directed wholly to their Medisave accounts. This would be similar to how

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the low-wage employees are going to receive a portion of their Workfare in cash. Some finetuning of the Workfare scheme in the name of compassion would not jeopardise the policy of encouraging this group to work. Instead, it would give these workers and their families a much needed helping hand.

Sir, I would like to make the second and third points of my speech in Malay.

( In Malay ): [For vernacular speech, please refer to Appendix A.] The next topic is on the CPF Ordinary Account Interest Rates. I believe that all employees welcome the increase in employers’ CPF contribution rate by 1.5 percentage point to 14.5%, starting from July. One percentage point will go into the Ordinary Account and the remaining 0.5 percentage point will go into the Medisave Account. Unfortunately, for the CPF account holders, the interest rate for the Ordinary Account did not change, that is, 2.5% per annum. Considering that our economic situation has improved and banks in the private sector offer a higher interest rate, I urge the CPF Board to consider increasing the interest rate paid to members in their Ordinary Accounts. A higher interest rate will help the sandwich group, that is, the middle class which is sandwiched in between. They did not get as much benefit as the low-income earners. For most Singaporeans, CPF savings form the biggest component in their personal savings. A more competitive interest rate paid on the Ordinary Account will make a big difference to their retirement funds. My question is: can the CPF Board explain why such a low interest rate is still maintained?

Next, I would like to speak on education. Education is one of the most important areas for the nation's development. We are now living in a knowledge-based economy. The quality of our education will determine our

*Cols. 1783-1786.

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survival and our future. However, a good education will require a huge expenditure. We have to invest in teaching infrastructure, physical facilities, effective and updated curriculum and, most importantly, manpower - our teachers.

In September last year, the Ministry of Education announced that it would spend $250 million over the next three years to, I quote, “ensure that the teaching profession continues to attract, motivate and retain good teachers, capable school leaders, and dedicated specialists.” This was the GROW package, which means Growth, ie, personal and professional development of our education officers through better Recognition, Opportunities and Well-being.

I feel that it is very important for us to recruit and retain the best talent in the teaching profession. There is a saying that in a completely rational world, the best amongst us would be teachers and the rest would have to settle for other jobs. Therefore, it is important that we treat our teachers well, not only in terms of their remuneration, but also their working conditions. We must intensify our effort to inject more “Wow”, ie, “W” for well-being, into the GROW package.

I have received feedback that our teachers today have very long working hours and undertake a wide range of duties. When teachers have to undertake many responsibilities beyond their actual job, I worry about the impact on their core responsibility, ie, teaching. More resources have to be deployed so that our teachers will not suffer from burn-out, fatigue and disillusion. Many teachers have given their feedback to schools, the teachers' union and the media that they do not have enough time to rest and focus on customising a day's lesson for their classes. Much time is spent on administrative duties and other

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miscellaneous work until it shifts their attention away from their main job. I would like to ask the Government what are the resources that will be spent to ensure that our teachers are not overworked. Are we employing enough administrative assistants so that our teachers can focus their attention on teaching and guiding students?

Mr Speaker, Sir, I will continue my speech in English.

( In English ):

Integrated Resorts

Sir, my fourth point is that on the integrated resorts. Singapore is perpetually in the process of re-inventing herself to stay relevant and competitive in the global market. Over the years, we have succeeded in building a reputation for safety, clean governance, efficiency and reliability. We have an image as a wholesome nation. A few years ago, we decided that we should inject more buzz into our city state. Our integrated resorts are supposed to fit into this new game plan. We aspire to be a global city, with our own blend of cultural attractions and nightlife, to compete with cities like New York, London, Paris and Shanghai.

My concern is how entities like the new glitzy casinos will impact upon our social environment. As we have observed in other cities where there are casinos and centres of “adult entertainment”, they often attract other vices - prostitution, alcohol and drug abuse, illegal moneylending and a whole host of other social ills. It is like opening Pandora’s box.

How do we keep the rise of vice activities, which will come with the IRs’ casinos, in check? At present, even

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without the casinos, we are already seeing more and more cases of loanshark activities. Cases of illegal moneylending and harassment have been on the uptrend over the last few years. Once the casinos open, we can expect the number of such cases to increase.

Will the change in our environment undermine our key and unique selling points of being a wholesome environment to bring up a young family and a safe place for investors to do business? We have heard time and again that safety, a “culturally clean” environment, our health and education systems are some of the main reasons many families choose to work, live and even settle in Singapore. These are also reasons why investors choose to invest money in Singapore. It is not hard to imagine that these factors will have a great influence on the decision-making process of any organisation deciding on its geographical location of its offices.

I accept that we have made a decision on the IRs and that we have to proceed with this project. However, we must be fully prepared, in terms of funds and resources, to contain the accompanying damage. There will be social costs of broken and dysfunctional families and the impact of new moral norms and alternative lifestyles will only become evident in another 10 to 20 years.

The Government has promised to set aside enough funds to ensure that such problems will be contained and minimised. These include deploying more police officers and investigators, anti-vice squads and family counsellors. The question is: how much will be spent? And the question preceding that is: how much money will the Government need to spend to help compulsive gamblers overcome their addiction? After all, many will probably have difficulty paying for their counselling sessions. In addition, do we really have enough trained

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counsellors? Recent press articles have highlighted the personal sacrifices such professionals have to make, due to their low pay and high burn-out rate. Will we have enough funds to keep such services going, as the number of addicts increases? In addition, I am highly concerned with vice activities. These can spread rapidly from the casino into our heartlands due to our small geographical size. In addition to the previous questions, I wish to ask: how much money and resources will the Government be willing to spend in curbing the vice activities which the IRs' casinos will inevitably bring?

With this, Mr Speaker, Sir, I would like to conclude with my congratulations to the Second Minister for Finance, Mr Tharman Shanmugaratnam, and closing with my support for the Budget.