CENTRAL PROVIDENT FUND (AMENDMENT NO. 2) BILL

The Minister for Labour and Welfare (Mr Lim Yew Hock): Mr Speaker, Sir, I hand to the Clerk a Certificate of Urgency signed by the Officer Administering the Government in respect of a Bill intituled "An Ordinance to amend the Central Provident Fund Ordinance, 1953 (No. 34 of 1953)".

Certificate of Urgency handed in.

Mr Speaker: Have you typed copies of the Bill available?

Mr Lim Yew Hock: Yes, Sir, I have.

Mr Speaker: Please continue, Mr Lim Yew Hock.

First Reading

Mr Lim Yew Hock: Sir, I have to introduce to this Assembly a Bill intituled "An Ordinance to amend the Central Provident Fund Ordinance, 1953 (No. 34 of 1953)".

Mr Speaker: May I have the typed copies, please?

Bill read the First time.

Mr Lim Yew Hock: Sir, under Standing Order No. 59, I hand in to the Clerk a sufficient number of copies of this Bill for distribution to hon. Members.

Typed copies of the Bill handed in to the Clerk and distributed to hon. Members.

Second Reading

Mr Speaker: Mr Lim Yew Hock, will you move the Second Reading, please?

Mr Lim Yew Hock: Mr Speaker, Sir, before I formally move the Second Reading of this Bill, I would like to explain to hon. Members the urgency, or the reason for the urgency, of carrying this Bill through all stages at this sitting.

The Central Provident Fund Ordinance was enacted in 1953, and was to have come into force on May Day this year. However, soon after I took office in April, representations were made to me that amendments were necessary to the Central Provident Fund Ordinance. It was therefore decided to postpone the operation of the Fund so that these representations could be considered and any necessary amendments prepared. This, Sir, has now been done, and the Bill before the House is the result. It is important that there should be no further delay in putting into operation the Central Provident Fund so that it can start during the second half of this year.

The amendments that are sought today, Sir, are necessary to ensure the smoother working of the Fund - hence the Certificate of Urgency.

Sir, clause 2 of the Bill provides for the operation of the Fund as from July 1st, and for the refund of any deductions which may have been made before that date. But it also provides that if both parties agree, such deductions may be paid into the Fund.

Many of the changes embodied in these amendments are minor changes, suggested by the Board to ensure, as I said earlier, Sir, the smoother working of the Fund. The purpose of these is set out in detail in the Objects and Reasons, and I do not think it is necessary for me to dwell on them. There are, however, several changes of substance and importance.

Clause 6, Sir, and the new Schedule to which it refers, provide that employees who earn not more than $200 per month do not have to contribute to the Fund, though their employers must still make their contributions of 5 per cent of their wages. It was put to me, Sir, that the lower-paid workers in present circumstances cannot afford to lay aside 5 per cent of their wages each month, even though it is to provide an investment for the future. It can hardly be denied that this is true, and that these lower-paid workers should therefore be exempt from contributing to the Fund.

A special provision is put into the Schedule so that an employee whose wages are between $200 and $210.50 in any month shall not pay a full 5 per cent contribution, but only so much as would reduce the net amount he would receive as pay for the month to $200. Without this provision, an employee whose wages were in this zone would have less to take home than the employee whose wages were only $200.

Clause 17 (a), Sir, amends subsection (2) of section 21 of the principal Ordinance so that private provident funds or schemes will not be eligible for approval unless they were established before 11th December, 1953, the date of enactment of the Ordinance. The Ordinance in its present form requires the Board to approve of any private fund or scheme established by an employer at any time, if it provides pecuniary benefits for the employees of not less value than the benefits provided under the Ordinance. Employees who are members of any fund which is approved will not be liable to contribute to the Central Provident Fund, nor will their employers be liable to contribute in respect of them. If this is permitted, Sir, it means that employees can be removed from the scope of the Central Provident Fund at any time by the setting up of new schemes, and the number of employees covered by the Fund will diminish. The cost of supervising these schemes would have to be met by the Board which would be receiving no income from investments in respect of them. What is even more important, Sir, is that it would, in practice, be impossible to ensure that contributions to numerous funds were paid correctly, or that employees received the full benefits due to them. This amendment would prevent this anomalous state of affairs, though it would not, of course, prevent an employer from setting up another scheme in addition to participating in the Central Provident Fund if he so wished.

Clause 17 (b), Sir, seeks to add additional subsections to section 21 of the Ordinance, and a new subsection (8) gives power to the Board to exempt non-domiciled employees getting more than $500 per month as wages who already enjoy adequate retirement benefit rights. There are certain employees in Singapore who have pension rights under various schemes provided by their employers, or under government schemes in other countries, and who are not domiciled in Malaya, to whom it may be reasonable to give exemption from contributing to the Central Provident Fund. Such schemes cannot generally be amended to bring them within the provisions of the Ordinance. Nevertheless, the retirement benefits provided by these schemes may be quite adequate in comparison with the amount which would be payable from the Central Provident Fund on reaching the age of 55, particularly in the case of employees whose wages are over $500 per month, for whom the Central Fund contribution is at the rate of less than 5 per cent of their wages. It is proposed to give the Board under this new subsection powers to exempt such individual employees if they apply for exemption.

Clause 21, Sir, in addition to exempting employees earning not more than $200 per month, as I have already mentioned, substitutes contributions at the flat rate of 5 per cent for the present set scales. This will greatly facilitate the calculation of the amount to be deducted, especially in cases where wages are paid daily or weekly and the amount paid on different pay-days is variable. As the law stands at present, the calculation of the contribution in these cases is very complicated, and in the case of big employers, would involve considerable expense and waste of time. The new Schedule will avoid this.

Mr Speaker, Sir, one of the suggestions made to me was that monies paid out of the Fund on the death of an employee should not be subject to estate duty unless they exceed some limit to be decided upon. I am in sympathy with this suggestion, but it needs careful consideration in relation to other financial matters. It is not urgent, because estates up to $1,000 in value are already exempt from estate duty, and it will be some time before any member's share of the Fund will be more than $1,000. I give my assurance that before the matter can arise, this suggestion will be further considered carefully and sympathetically.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Financial Secretary (Mr T. M. Hart): Sir, I rise to second the motion.

Question proposed.

Mr Goh Tong Liang (Bukit Panjang): Mr Speaker, Sir, I would like to ask the Hon. the Minister for Labour and Welfare whether Gazette Notification No. 890 fixing the date for the commencement of the Central Provident Fund has been withdrawn?

Mr M. P. D. Nair (Seletar): Sir, while congratulating my hon. Friend the Minister for Labour and Welfare on the important amendment which he made in regard to the Schedule in respect of employees who are receiving a wage rate exceeding $10 but not $200, I would like to point out to this House that those employees in this category will be taking home a much smaller sum. If calculated on the basis of $200, it comes to about $2,400 for a period of 20 years. I think this sum is very low.

When proposals were made to amend this particular Schedule, I thought that the Government would come in and give aid to these workers; in other words, the Government would consider contributing a certain percentage as their contribution, thus enabling these workers to take home a very substantial sum on retirement. As I see it, these employees stand to lose. I am wondering whether Government has any plans to supplement the retirement benefits of employees in this category. I feel that they deserve Government's earnest consideration.

Mr Lim Koon Teck (Paya Lebar): On a point of clarification, Sir, and reserving my right to speak, may I ask that the Member for Bukit Panjang's question be answered by the Hon. the Minister for Labour and Welfare?

Mr Lim Yew Hock: Sir, if reference is made to clause 2 of this Bill, it will be seen that by inference the date of commencement of the Central Provident Fund Ordinance has been postponed to 1st July, 1955.

Mr Lim Koon Teck: Mr Speaker, Sir, on Monday, 4th April, Gazette Notification No. 890 was published, stating that the Central Provident Fund would come into operation on the 1st of May. To our knowledge, nothing has appeared in the Gazette authorised by the Governor either to withdraw or extend the date of the coming into operation of this Ordinance. But on the 28th of April the Minister announced that the date of commencement was to be postponed. I think, Sir, it is highly unconstitutional for any Minister to postpone the operation of any law that has been passed by the Legislative Council and which has not only received the sanction of the Governor, but also a date for the operation of which has been definitely fixed. It seems to me that on this particular point the Minister for Labour and Welfare had two courses open to him: either he should have had the consent of this Assembly to postpone the operation of that Ordinance -

The Chief Minister: Mr Speaker, Sir, on a point of order. Is the hon. Member speaking to the motion? It seems to me, with respect, Mr Speaker, Sir, that he is speaking to what might have been a motion of censure for an action which suspended the operation of law, out it has no reference whatsoever to the motion now before they House.

Mr Speaker: I think, Mr Chief Minister, that the Member for Paya Lebar (Mr Lim Koon Teck) is probably talking on the principle involved in clause 2, where the date given for the coming into operation of the Ordinance is the 1st July, as against a previous date. Mr Lim Koon Teck, please carry on.

Mr Lim Koon Teck: - either that; or he should have allowed the Central Provident Fund to commence on the date on which it was fixed, and he can easily have brought in all these amendments which he wants to do today. In fact, many, if not most, firms have already complied with the law requiring this Fund to commence as from the 1st May, and this has necessitated clause 2 of this Bill to legalise actions of employers for deducting contributions to the Provident Fund as from the 1st May.

Now, as the Minister has said, there is not a great deal of new matters in this Bill, the most important of which is the right of those workers drawing less than $200 per month not to contribute to the Fund. In such cases, only the employers are to contribute. Well, this is only a matter of compromise, and I do not think it is of great importance either way.

On the other hand, I do not think that this Bill should have taken the Minister two months to draw up, and taking such a long time over it, it has made it necessary for him to apply for a Certificate of Urgency from the Governor. I submit, Sir, that Certificates from the Governor should only be -

Mr Speaker: Order, order. I do not think any hon. Member can question a Certificate of Urgency.

Mr Lim Koon Teck: I am not questioning it, Sir.

Mr Speaker: No hon. Member can question a Certificate of Urgency from the Governor. If he does so, he is indirectly offending against Standing Order No. 31 (8), where the conduct of the Governor shall not be referred to in any circumstances.

Mr Lim Koon Teck: No, Sir, I know that section well. I am not questioning the act of the Governor at all. I am only remarking that if the Minister had taken one of the two courses I have outlined, it would not have been necessary to appeal to the Governor in such cases.

The other point is this: he has had nearly two months, and yet we have only notice of this Bill, Sir, less than 30 hours ago. We had made a protest against such short notice, but we were referred to section 22 of the Standing Orders, subsection (3) of which reads:

"Except where it is otherwise provided in any Standing Order, not less than seven clear days' notice of any motion shall be given unless it is in the name of a Minister, in which case one clear day's notice shall be sufficient."

Sir, this is a special privilege given to a very responsible Minister of the Government, and a special privilege should only be used -

Mr Speaker: Order, order. You are still criticising indirectly the Certificate of Urgency. We are now debating the Second Reading, and you must confine yourself to the general merits and principles of the Bill.

Mr Lim Koon Teck: We are only voicing our dissatisfaction -

Mr Speaker: Order, order. You can voice your dissatisfaction by not taking part in the debate or by getting the right later on to speak on the Adjournment.

Mr Lim Koon Teck: Well, I reserve my right to speak on the Adjournment.

Mr Speaker: Mr Lim Yew Hock, in reply?

Mr Lim Yew Hock: Mr Speaker, Sir, I have already replied to the point raised by the Member for Bukit Panjang (Mr Goh Tong Liang).

In regard to the point raised by the Member for Seletar (Mr Nair), he states that by assisting the workers who receive less than $200 in that they need not now have to contribute to the Provident Fund, they would, when they retire, receive less money than they would have got had they contributed themselves. There is nothing, Sir, in the proposed amendment to prevent any member of the Fund, who is in receipt of less than $200, to contribute himself if he so desires.

In regard to the point raised by the Member for Paya Lebar, he says that the Ordinance should not have been postponed and that it should have been allowed to operate as from the 1st of May. I have pointed out in my speech, Sir, that soon after I took office I had received a lot of complaints from the workers who demanded that the date of operation of the Ordinance should be postponed. They expressed a genuine fear that the Ordinance was not in their interests and they brought up certain points to substantiate their views. It is as a result of their representations, Sir, that it was felt necessary, in the interests of the large majority of workers, that the Ordinance should not come into operation on the 1st of May. I do not think, Sir, that the Member for Paya Lebar would now object to the Second Reading of the Bill, thereby delaying the coming into operation of the Ordinance.

Question put, and agreed to.

Bill accordingly read a Second time.