Committee

[Mr SPEAKER in the Chair]

Clause 81-

Amendment proposed - [26th July,1957] - In page 107, line 18, to leave out "nor, except in special circumstances, the period". - [Mr John Ede].

Question again proposed, "That the words proposed to be left out, be left out."

Mr John Ede (Tanglin): Mr Chairman, if I may borrow a cricket metaphor, I feel rather like an overnight not-out batsman who has to get his eye in before attacking the bowling of the Hon. the Financial Secretary, and I regret that it will be necessary to recapitulate, to some extent, the arguments on this clause 81 which I expounded on Friday afternoon.

The Government looked, pardonably, a little bewildered at the gloomy prognostications of the Financial Secretary as a reaction to my quite simple proposition. Let me make it as brief and as clear as possible. We want clause 81 to read as follows:

"Every sum borrowed under section 78 of this Ordinance shall be redeemed within such period not exceeding sixty years as the City Council, with the sanction of the Governor in Council, may determine: Provided always that such period shall not exceed the estimated useful life of the purpose for which the money has been raised."

In other words, we agree that 60 years is the outside limit for the redemption of any sum borrowed by the City Council. We further agree that if the estimated life of the purpose for which the money is borrowed is less than 60 years - and I quoted, as an example, 40 years for an extension to our power-station - then 40 years should be the outside limit for the period of redemption. The Hon. the Financial Secretary spent most of his speech establishing these points on which we already were agreed and on which there was no argument.

Where we disagree is on the further proviso, namely, that the period of redemption should not exceed the period of the loan raised under section 79. I gave the House one example. I stated that if the City Council wished to raise a loan on, say, $10 million to extend the power-station, the period of the loan being 10 years, the period of the estimated useful life of the extension being 40 years, then the period of redemption should be related to the period of the estimated useful life, namely, 40 years, and not to the period of the loan, namely, 10 years. Because in this case repayment from your electricity revenue account will be at the rate of $250,000 per year spread over 40 years, instead of $1 million per year spread over 10 years, a saving of $750,000 per year. And a saving of $750,000 per year in the electricity account could mean a reduction in the unit price of electricity.

I went on to argue that it was the declared policy of the Government to encourage the setting up of more industries in the colony and that cheaper power would be a very important contributory factor. Two months ago I pointed out to the Minister for Commerce and Industry, in the income tax debate, that the right hand of his Ministry did not know what the left hand of the Treasury was doing. Since pointing out that many businessmen prospecting in Singapore had been discouraged and indeed disgusted at being sent Income Tax Assessment Forms under, I think, section 12 (4) of the Income Tax Ordinance after spending five days in the colony, instead of being welcomed to this island and treated as visitors under, I think it is, section 13 (3) of the Ordinance, many fresh cases of this ridiculous persecution have come to our knowledge. I shall be filing a further question on this matter in the very near future. This is one factor by which the encouragement of fresh industry is being strangled before birth.

The Financial Secretary (Mr T. M. Hart): On a point of order, Sir. May I ask, Mr Chairman, whether reference to the activities of the Income Tax Department is relevant to this question of funding a loan?

The Chairman: I understood the hon. Member to be mentioning that topic only in passing, to illustrate the point being made. It is not of course open for debate.

Mr John Ede: Thank you, Sir. The point, in our view, is entirely relevant. I was pointing out that this is one factor by which the encouragement of fresh industry is being strangled before birth.

The other question is the question of cheaper power which will be thwarted if the Government does not accept this amendment. You and I, Sir, and every citizen and every existing industry in Singapore are paying more for electricity today than we need, because of this policy of relating the period of redemption of electricity loans to the period of the loans, instead of to the period of the estimated useful life of the power station for which the loans have been raised. But it should be remembered that the only occasions on which the City Council have applied for loans were applied in order to raise loans for electricity, or for water, and for very few purposes other than these. The Financial Secretary's only answer to our plea for greater financial flexibility is: firstly, a recital of words like "prudence", "caution", "foresight", "possibilities", "probabilities", "imponderabalia" of all kinds, and so on; and, secondly, the proposition that we should not give the City Council carte blanche in this matter; and, thirdly, that it might not be easy to raise loans in future. Our answer to this argument is as follows: Firstly, we are not proposing to give the City Council carte blanche. Clauses 78, 79, and 81 are hedged around with the necessity for obtaining the sanction of the Governor in Council, so the necessary safeguards are there. Secondly, if in 10 or 20 or 30 years' time Singapore cannot raise loans, then it means that Singapore is sunk anyway; and I refuse to share the Financial Secretary's pessimism on that. Thirdly, the best way to ensure that we are financially flourishing in 10 years' time is to increase our industrial potential today, and one of the factors to attract new industries is a more flexible financial policy in matters such as the one before us today.

One last point: The amendment to clause 81 has been advocated by the City Council representatives, and their submission to the Select Committee can be found in col. 156 of the Report as quoted by the Attorney-General:

"With regard to clause 83, the City Council in its Report No. 4 stated:

'Under the provisions of the present Municipal Ordinance any sums borrowed must be redeemed within the period sanctioned for the raising of the money, i.e., the redemption period is related to the borrowing period rather than to the estimated useful life of the purpose for which the money is utilised.'"

Sir, I will not quote the whole passage, but only the last sentence which states:

"'It is hoped that the Governor in Council will consider sympathetically any representations which may be made in the future for a redemption period longer than the borrowing period.'"

Once again, let me emphasise that this submission was made by Labour Front Councillors and Liberal-Socialist Councillors in equal numbers. I hope that once again the Labour Front Members opposite are not going to repudiate the recommendations of their own Party.

Mr G. A. P. Sutherland (Nominated): Mr Chairman, Sir, the Hon. the Financial Secretary dealt very fully with this matter in his speech on Friday afternoon, and, in rising to oppose the amendment, I wish only to supplement his remarks on one point, which point, it seems to me, is the only one on which there is major disagreement between the hon. mover of the amendment and the Government. I refer of course to the fact that if this amendment is carried, the City Council will be in a position to fund loans over a period equivalent to the life of the physical assets to which they are related, rather than to the period from issuance to redemption as has hitherto been the case.

Sir, I should like to say that, in spite of what the Member for Serangoon and the Member for Telok Ayer have said in the last few days, this nominated Member's vote cannot be counted upon by the Government. But in this instance I am wholly on their side. In the past, it has been the practice in the City Council - and a good practice, too - to fund any loan in such a way that the sinking fund at the time of repayment was in a position to take care of all outstandings, either by putting money in there or by buying up script as it came on the market. To my way of thinking, any departure from this practice would be unwise in spite of the very cogent arguments which the Member for Tanglin has put forward this morning in respect of the future of industry, and the fact that electricity would be made cheaper to the consuming public. Mr David Marshall, the former Member for Cairnhill, once said in this House that every Member of it, with the exception of myself, is a Socialist, but I would appeal, Sir, to this wholly Socialist Assembly for a conservative approach to this matter.

The most powerful point made by the Hon. the Financial Secretary was that, if loans had not been fully funded at redemption date, the City Council would be obliged to convert or to raise money by new loans, and he said it might be very difficult for them to do so. He did not say where it would be raised, but whether it was in local markets or in foreign markets, I agree absolutely that it might be difficult to do so. The future for long-term borrowing in this country is not very bright. Now to this the Member for Tanglin has said that if a time should arrive when Singapore would be unable to raise loans, Singapore might as well pack up, or words to that effect. The fact is that such a situation has already arisen. To my knowledge, the Municipality and the City Council have been continuously going to the public for loans from 1951 to 1956 and, in respect of the last two loans, it is well known that the public were very poor investors. In fact, had it not been for certain central institutions, quasi-governmental, coming to the rescue, some of them would have flopped.

10.15 a.m.

In the past, a large measure of support for these loans has been given by banks, but with the advent in the near future of a central banking institution or institutions, such support can no longer be counted on. Besides, I think, as I have said once before in this House, support for government loans by banks is inflationary. The root of the trouble, Sir, lies in creeping, somewhat accelerated recently, inflation and the ever-diminishing purchasing power of money. "The Economist" of 20th July in a leading article which I recommend to all Socialists says:

"Inflation is like sin. Everybody is against it, but it goes on."

The present low levels of gilt-edged securities in the London market clearly indicate the pessimistic attitude of the public to the future of Government stocks. This is partly due, of course, to political fears and the fear of devaluation of the pound by the British Government. Sir, I am not making a political speech even in the widest sense of the word "political", but the Labour Party in England in its plans for nationalisation is talking of the intention to permit Labour's new national pension fund to be invested in equities. Inflation, in fact, has worn the gilt off gilt-edged. Members of this House doubtless know that the current price of 3½ per cent War Loan is £67. This of course is in irredeemable stock. But there is another 3½ per cent Government loan - admittedly the redemption date is 1999, so that on the Stock Exchange it is known as the "Eternity Loan" - but even so its price is only £71.

Yes, the public are not so keen on Government and Municipal bonds and the long-term borrowings at fixed rates of interest by Governments and Municipalities is coming to be regarded by the public - and I quote from a well-known financial journal - as "nothing short of an organised swindle". Unless a brake can be put on inflation and faith in Government bonds restored, more and more people in every country will tend to invest in equities in order to preserve their capital; in other words, they hope that the assets of the relative companies will appreciate in value as the currency depreciates. When all is said and done, any government or municipal bond is merely an undertaking to repay at a fixed future time the amount originally borrowed; in other words, a sum certain in money whose purchasing power in the meantime is quite certain to be vastly diminished. Unfortunately the outlook for halting inflation is pretty bleak.

I therefore oppose this amendment and urge that, in terms of the existing section, the City Council continue to fund loans within the period for which money has been raised. One has to remember too that the moneys are not lying idle as they are doubtless being employed by the City Council in the ways permitted in subsequent sections of the Ordinance.

Mr Lim Koon Teck (Paya Lebar): Mr Chairman, Sir, I rise to meet a few of the points mentioned by the Hon. Mr Sutherland. Mr Sutherland and the Hon. the Financial Secretary are always looking at the problem from the point of view of bankers. It is a useful and a correct way of looking at these financial problems. But I think at the present day their equilibrium has been upset by this creeping inflation, as has been described by Mr Sutherland, and like all good men, when they lose their equilibrium, they tend to fall backwards and sit tight instead of moving with the times.

Sir, a new problem is with us today and we have to face it in a new light. With all this closing down of factories in Singapore - and some more are closing down - we have to take steps to encourage industry and I think one of the best ways to encourage people to carry on in industry is the cheapening of power for the use of industrial units for industries which want to start again. Our trouble is that we have been paying for posterity. We are now making short-term loans confined to the term of the loan rather than to the usefulness of the project, and by doing so we bring up the cost of the project - the $60 million which has been thrown into the new power-station - and this now has to be repaid within a short time by us instead of repayment being spread over the term of the project's usefulness and shared by posterity.

Inflation should make us build more now, because whatever we build now is going to be paid for in less valuable money. And whatever we pay now is much less than what we shall have to pay in 10 or 20 years' time. That, to my mind, is a very cogent point for saying that we must carry on and build what we can and spread out our payments, rather than within the term limited by this section.

Then the question of the difficulty of raising loans arises. Every country after it has got on its own feet will have many people who are frightened of the course that the nation will take. To a certain extent, that will affect the case of obtaining loans. Now that we are going to achieve self-government and independence, we shall have to look for means of financing our own projects. There is, for instance, all the money - millions and millions - coming in every month into the provident funds. Why should not that be diverted and used for financing the industrial schemes of the City Council? Then again a lot of money is being sent abroad that should be invested locally - I refer to life assurance premiums. I think part of those premiums could be invested locally, and they should be made to help the public services of this country.

The Minister for Commerce and Industry (Mr J. M. Jumabhoy): Mr Chairman, the Member for Tanglin has put up good arguments why latitude should be given to the City Council to fund its loans over the period of the life of the asset, but he has taken the provision in this clause in a very pessimistic light. The words which he seeks to omit are: "nor, except in special circumstances, the period". When the special circumstances are there, I am sure the Governor in Council would give sanction for the extension of the redemption period. The provision of these few words in the clause is made because the credit of the city depends on the credit of the Government and of the country, and therefore it is up to the Financial Secretary, or whoever may be in charge of the treasury of the country, to correlate all the financial undertakings of the City Council, the Government and so on, which are required for the public sector, and to see that there is no overlapping. Otherwise what might happen is that the City Council may have three issues of loans over a period of three years for the same asset, the life of which may be 40 years; then during the 40 years you have to fund all these three yearly loans, and if you cannot fund it at that time, you will have to go out to the market to get the balance, which means that you will have to do it in a big way. So to prevent all this happening, that power is provided for in the clause, but it does not follow that the Governor in Council would refuse to give that power when the special circumstances are there.

The Member for Paya Lebar, in a sweeping statement, referred to the closing down of factories. I refuse to admit that there has been such a vast scale closing down of factories as suggested or implied in his sweeping statement. There has been some closing down of factories, but to a greater extent there has been an opening up of new factories. If the hon. Member has any information on this, I will be glad to receive it.

The hon. Member also criticised the Hon. Mr Sutherland about his fear of the creeping danger of inflation. Sir, let me make this plain: the creeping danger of inflation is world-wide, but there is a bigger creeping danger today in Singapore, and that is irresponsible politics. That can do us a lot of harm - irresponsible statements by politicians who do not care whether they are damaging the country's economy and credit in the eyes of the world. It can not only stop people from coming here and opening industries, but it can also stop our credit from working on the London market and other foreign markets. We should be very careful of that. We should never make sweeping statements which may be quoted the world over and be a pointer to those who wish to come here and invest money, because that will prevent them from doing so.

Sir, in the past the people of Singapore have, comparatively speaking, been living on a bed of roses. They have had nothing to worry about in the economic set-up. We have had our entrepot trade, but now with the growing population the time is coming when we will have to fight for our survival, and that is why it is important that because of this fight we should prevent irresponsible statements.

Mr R. Jumabhoy (Telok Ayer): Mr Chairman, Sir, I have a great regard for the financial knowledge and ability of the Hon. the Financial Secretary, an ex-officio Member of this Assembly, but his utterances the other day would have had a very bad effect for Singapore on the financial market overseas. Sir, what is the credit of Singapore? Have we any vast lands and resources, any big reserves? I can say almost Nil.

10.30 a.m.

We have to depend on our wits, how to make money through entrepôt trade. We have no credit whatsoever as far as resources are concerned. We can mortgage nothing.

Now, Sir, in order to maintain industry and to make the existence of the people easier, it is necessary to bring down the cost of water and power. That is the point made by the mover of the amendment - if the life of the project is 30 or 40 years, why float a loan for 10 years and have its redemption paid up within ten years and put up your charges to that extent? Suppose the loan redemption is spread out over many years, the cost of the power will be cheaper. That goes without saying. In other words, if you have a short-term loan and you want to redeem it early, say 10 years, the cost is higher because you have to pay into the sinking fund for the redemption of the loan. That is very simple arithmetic. And that is why the mover has time and again emphasised the necessity of taking away this proviso.

Sir, the hon. Mr Sutherland did have an optimistic outlook for the colony. As a banker, he is in the driver's seat, but there is a well-known saying that the banker is the first to withdraw the umbrella even before the first sign of rain. Credit in many countries is being cut and even here we are feeling the cutting off of the credit. That is a fact, that the merchants are suffering. As democracy progresses and Singapore gets internal self-government and independence - of course, we are going to get it some day, I hope it will not be in the very distant future - then we will have to depend more on our resources than on the United Kingdom or any other country. And what can we depend on, unless we cut our cloth according to our needs? That is the only remedy, and here is one remedy suggested - that if the loans are spread out, the cost will be cheaper.

What I meant the other day, and I always mean, about nominated and ex-officio Members is this: let them not frustrate democracy and throttle the elected Members' votes by voting on the other side.

The Minister for Communications and Works (Mr Francis Thomas): Mr Chairman, I must assert my right as a nominated Member to take a full part in this Assembly. In fact, I have sworn an oath to do so, and I cannot possibly under pressure from the Member for Telok Ayer abandon my oath or say that I will not frustrate him. When he is wrong I will of course do so. But if he is in the right, I will support him. I merely rise to make this point, Mr Chairman.

Now I would like to make one or two comments on the speeches we have had from the Liberal-Socialists on this question of loans - whether they should be paid off as quickly as possible, or whether they should be paid off as slowly as possible. The Member for Paya Lebar said that we had new problems and that we must face them with new ideas. I am afraid that that is what the Liberal-Socialists are not doing. This idea of a long-term loan is an old one which is tending to get out of date. As the hon. Mr Sutherland pointed out, the whole trend nowadays is otherwise. The remark that we sometimes hear around Singapore "A dollar saved is 50 cents wasted" is one that is often in people's minds and undoubtedly has an effect on the willingness of the people to put their money aside for this sort of investment. Savings take place largely in the insurance type of saving - contractual saving where you pay so much per month or per year in return for certain guaranteed benefits. And that aspect is one which the hon. Member is overlooking. Quite apart from whether you can get the money for a long-term loan, I personally feel it is highly desirable that we should, as far as we possibly could, in both public and private investments, make our capital investment out of revenue or profits, and not out of loan money, committing ourselves far into the future.

The whole tempo of industrial economic growth is changing in the world today. The turnover of equipment is changing; there is need to revise our ideas as new methods of producing wealth are developed; and to tie ourselves up with extremely long-term loans seems to me to be out of date. It is a very limiting factor on economic growth.

The Member for Tanglin is proposing to cheapen costs by spreading the load over a longer period of years. That is one way of doing it. An alternative way is to spread your costs over a larger number of consumers. As the number of people making use of the services expands, so the proportion of the costs which are accounted for by overheads is reduced, and costs can come down. You can also cheapen your costs by higher efficiency, and that is of course the most desirable thing of all - productivity should be maximum, efficiency should be maximum, and then the rate of costs is of minor importance.

Mr Lim Choon Mong (Serangoon): Mr Chairman, Sir, I am no economist, no financial wizard. I am going to speak from the point of view of the man in the street. I am going to be charged for the services rendered, and I am of the opinion that they should be as cheap as possible. I am not going to say that financial matters are not going to affect me.

Today I have heard arguments from the hon. Mr Sutherland as well as Members of the Labour Front. They seem to speak on one theme, and that is, we must not make the people who have money invest in our projects and then make them lose their money - for every dollar, collect 50 cents. "Every dollar saved means 50 cents wasted." Now, of course, that is contrary to their principles of Socialism. If a few rich men must lose their money and if benefit can be given to everybody in Singapore, then I am all for it, and anybody who is trying to protect them is not one who is for the people but really one who is for vested interests.

Then the argument is again advanced about inflation - that you will have less value for your money. They have said that if you are going to prevent inflation, the most important thing is to step up production. But how are you going to step up production, Sir, if you do not have the necessary means of helping to step it up? If you do not provide efficient and cheap services to encourage people to come along and increase production? Well, there are two courses open today. One course is to hold your hands and say, "Let us watch, keep our money, and see how things go." In that way, money will also go down because there will surely be inflation. The other way is, "Well, there may be inflation, but let us try and see how we can stop it." We can step up industry. At least we are trying to do something to stop inflation and not just hold our hands. The second course is definitely preferable to the first course of holding our hands, sitting down and saying, "We can do nothing. We will not do anything."

Mr J. M. Jumabhoy: Just one word, Sir. The Member for Serangoon seems to have misunderstood the Socialistic principles of the Labour Front. He says that if rich men lose money and the people benefit, he is all for it. First of all, Sir, looking at the way things are moving, I doubt if rich men will invest in Singapore for long, and therefore we will have to look to the poor men to invest their savings in the City Council and Government loans in the future. It is the men and women of Singapore, the workers, who must invest and we do not want them to lose their life savings, whether or not that is contrary to Socialistic principles, as the hon. Member thinks. But there is one thing Sir, and that is, whether it is the poor men or the rich men, if you consciously evolve a policy so that the person investing his money loses it after a period of years, you are cheating, and we do not stand for such cheating. If we want to make the rich men pay for the benefit of Singapore, there are other ways of doing it, Sir. You can nationalise, you can do a lot of things, but not cheating in this fashion.

The Financial Secretary (Mr T. M. Hart): Sir, before I deal with the main body of the points which have been raised today, I should like to touch briefly on one point - I was castigated by the hon. Member for Tanglin on Friday for introducing once more the question of 60-year loans. This point was however at issue in the Select Committee. If reference is made to col. 158 of the Official Report (No. 6) of the proceedings of the Select Committee, it will be seen that the hon. Member was then a strong advocate of funding over a period in excess of 60 years. I quote him as saying:

"Well, Mr Chairman, what I would like to see is that the period can be extended beyond 60 years if the estimated useful life of the project extends beyond 60 years, so that the generations to follow do bear a fair share of the cost. If that is not the meaning then I have no alternative but to vote against the whole clause [clause 81]."

It seems to me that, at that particular stage of the proceedings, Mr Chairman, there were people who were Members of this Assembly who did feel most strongly that the loan should be funded over a period in excess of 60 years, and I merely made the remarks which I did on Friday, to emphasise that the Government's idea on that particular point was quite contrary to that expressed by the hon. Member of the Opposition in the Select Committee.

Sir, in connection with the points which have been raised today, I must thank the hon. Mr Sutherland for his support. He speaks with far more authority in these matters than I do, and I hope that hon. Members will pay due regard to the remarks which he made.

On the question of the effect in terms of reduction of costs to the consumer of funding a loan over the period of the useful life rather than the period of repayment, the hon. Member for Tanglin did quote certain figures, and I appreciate that, in quoting those figures, he was endeavouring to simplify the matter and to make a simple illustration for Members of the Assembly. But I think, if I may say so, that he overlooked the effect of compound interest in these matters. I have gone into the matter rather carefully, and on the periods which he quoted, I think that he rather tended to exaggerate the effect in terms of sinking fund contributions and savings as a result of reduced sinking fund contributions, but that is a minor point.

10.45 a.m.

With regard to the illustration which he gave, the effect in terms of savings in sinking fund contributions on the cost of the product - electricity was the case he quoted - I think it is difficult to say what the effect of this reduced charge would be on the cost to the consumer. It depends so much on the cost of production, the particular purpose of the whole electricity asset for which the loan was floated, and many other factors. In considering these matters, I have endeavoured, on the basis of the Annual Report by the City Treasurer, to make an estimate of what the effect would be on the cost of the electricity to the consumer if all the loans which have been raised for the electricity undertaking were funded on the basis of the useful life rather than the period for repayment. The result of my calculations must inevitably be exceedingly rough, because, first of all, they are based on statistics given in the City Treasurer's Annual Report for 1956 (which is available to all Members who wish to see it) and on a purely arbitrary estimate of my own of the life of the electricity undertaking. I would say that, in working this out, I have tried to be fair and if there was any doubt in my mind about the length of the life of any particular portion of the undertaking I have given the advantage to the Opposition. For these reasons, I hesitate to quote these calculations, but, for what they are worth, I will give them. It might be that, if the loans floated for the electrical undertaking had been funded over the period of the useful life of the undertaking, the cost of a unit of electricity now would be reduced by a fraction of a cent. That is all I can say. I cannot go into any greater detail, but it is open to Members, if they like, to examine the City Treasurer's Annual Report and try and work out similar calculations for themselves. I cannot say, of course, to what extent the saving would be passed on the consumer, because you will appreciate, Mr Chairman, that the cost of the average unit of electricity is the cost of producing that unit, whether it is power for industry, or power for the refrigerator at one's own home or a fan or merely for electric light; and these charges vary. It is difficult to say to what extent this saving would be passed on to the consumer. It might indeed be that the saving was merely utilised to stabilise prices at a time when prices and costs of production were rising very considerably.

Sir, I was accused not only on Friday but again today of being unnecessarily gloomy, in so far as I suggested that the City Council might possibly have difficulty in floating loans in the future. I think perhaps the hon. Member for Tanglin implied that I had been rather more categorical in the matter than indeed I was. He said that if the position was going to be such that the City Council would have difficulty - I think he went so far as to say that it could not float loans in future - then we might as well give up the ghost and abandon hope altogether. Of course, I did not suggest that at all. I merely said, as will be seen from the Hansard which will be available to Members, that I thought that the indications were that the City Council might conceivably have difficulty in floating a loan when they wanted it at any particular point in time in the future. I gave my reasons fairly fully for this feeling of uncertainty, and I do not wish to repeat them unnecessarily and take up the time of the House. But I think it is an important point and perhaps I should amplify my remarks to avoid any misunderstanding on the matter in the future.

Sir, the City Council has at the moment an outstanding debt of approximately $250 million, all but $25 million of which has been raised in Singapore since the war. Sir, we already know of large development commitments for which loan money will be required in the immediate future. The population of Singapore is growing at an alarming rate, and as it grows, so the demands on public utility services will be increased. The pressure on the City Council to expand their services will be increased. And all these demands will result in demands for additional loan money. I cannot say at the moment how these demands in the future will compare with the very heavy demands which have been made in the past, but I think it is safe to say that they will be fairly substantial. It is not going to be easy to obtain this money, no matter over what periods the demand is spread. The amount available for capital development is, and will be, limited. The needs of expanding trade, on which Singapore's prosperity depends and will in the future also depend, despite all we hear about industrial expansion - these needs must be met. Again the needs of industry which we hope will grow must also be met. All this will require capital. There will be competition from other borrowers, for example, the Government, whose needs are as great and as pressing as those of the City Council; and the investing public in their widest sense, that is, including all the bodies which contribute to Municipal and Government loans, will be fairly sated as far as City Council and Government loans are concerned. If to this need for what I call developmental capital we add the need for loan redemption capital, then the borrowing situation will be correspondingly complicated. I will deal with that point in greater detail later. I feel that any particular generation of taxpayers in the future would be very much aggrieved to find that they could not obtain the social and other services which they demanded because any loan money which was available at that particular time was required to pay off their grandfather's or their father's debts.

I doubt, Sir, if it is generally realised what the financial consequences of funding over the useful life of an asset might be, and this is very important. Let us take the case of a $20 million loan at five per cent, repayable over a period of 20 years, for a purpose the useful life of which is 40 years. Contributions are made to a sinking fund which, with compound interest, will enable the loan to be paid off in 40 years - that is what, I think, the hon. Member wishes. When the due date for repayment arrives after 20 years, that is, when the $20 million must be repaid, the sum of the sinking fund will amount to $6 million, which means that it will be $14 million short of the sum required for repayment of the loan: Now this money will have to be found from other sources, either, as Mr Sutherland suggested, conversion - which has not been very successful in the recent past - or floating new money, which is very difficult. Sir, since 1948 the City Council has borrowed in each year except one - 1950. Fortunately these loans are being funded in such a way that funds will be available for their repayment in due date. But suppose funding in all cases had been done over the useful life of the asset. In the case of water-works, for example, perhaps 60 years. In the 1970's all these loans will be due for repayment. At the same time, the City Council will no doubt require funds for new development, as will the Government. Would it be able to obtain them, with perhaps over $100 million required for the redemption of old loans? I doubt it. That will give hon. Members some idea of the position which might possibly arise in the future if the City Council, as it would no doubt wish to do, funded all loans over the useful life of the project instead of the period of the repayment.

Now, Sir, lastly in this particular connection, we are looking very far ahead, but perhaps let us not look so far ahead. Let us look no further than the present. Does the hon. Member think that the City Council could easily raise the funds it requires for development at the present time? If the City Council were to float a loan tomorrow, would he subscribe from his private fortune, and would he advise the organisation which he represents to do the same? I can assure you, without in any way spreading alarm or despondency but merely facing facts - in this connection I do not think that anything said here will have any effect on the credit of the City Council or the Government overseas, because what we say here matters very little to the financiers of the world who calculate the odds as far as the credit of countries or cities like Singapore is concerned - that if the City Council were to go on the loan market tomorrow, it would find the greatest difficulty in raising funds which it requires, and next year when the Government will also be on the market for loan money, the matter would be even more different. Sir, when I spoke on Friday I did mention the happy situation of local governments at home which could count with reasonable certainty on access to the London market; but at the present time, even these local government authorities in the United Kingdom are having the greatest difficulty in finding the money which they require for development projects even on the London market.

In my speech on Friday I said the conclusion was reached that it would be unwise to give the City Council carte blanche in the matter of funding loans, and I was immediately taken to task by the hon. Member for Tanglin. Indeed I was taken to task again today. He said the City Council did not have carte blanche because the sanction of the Governor in Council was required for any policy it might suggest in any particular case, as is indeed the case; and of course, the power is given to the Governor in Council under clauses, clause 79, for example, to fix the terms on which loans will be granted. But I think that the hon. Member has missed my point, that is, that if his amendment is accepted, the City Council will, in effect, have carte blanche. The general policy of funding loans will be laid down in the clause and the sanction of the Governor in Council, or their heirs and successors, will be a formality in the absence of any special circumstances which might make the following of the general policy undesirable. It is easy to imagine the pressure which will be brought to bear on the City Council to have all loans funded over the period of the useful life of the purpose. This pressure will be transmitted to an elected Cabinet. It is to avoid the consequences of this pressure and to render the position of the City Council or the Governor in Council less difficult, as well as to lay down what is considered to be a prudent policy, that it is desired to prescribe in the law what normal policy will be; and that, Sir, is all that clause 81 does do. It merely says that, normally, loans will be funded within the period of repayment. It does not exclude the possibility of funding over a longer period. I made that clear on Friday. In fact, it goes on to say that such funding will be allowed in certain circumstances. The only limitation which is placed on that extended power is that it shall in no case exceed the useful life or 60 years, whichever is the lesser. The clause, Sir, merely indicates, as a guide to politicians and as a reassurance to potential subscribers, what the policy will be, and that it will be a prudent one. I do not think in the circumstances that it would be wise to change it.

I also endeavoured to give some idea of the circumstances in which this power to extend the period would be used. I was careful to say that in all probability it would be used when circumstances in the loan market were such that funds could only be obtained at reasonable rates on short-term. This, I think I can say with confidence, meets the wishes of the officials of the City Council at the present time. After all, they are responsible for this policy of funding loans and for operating the public utilities.

Finally, Sir, at the risk of being accused once more of being what I might say characteristically and occupationally pessimistic, I would suggest that, at this time of great constitutional change, with its attendant uncertainty about the future, we should ignore vote-catching suggestions by politicians who have not yet shouldered responsibility or had the experience of being in power, with pre-election promises as bed-fellows - a most uncomfortable experience, since they seem to be all feet and knees and elbows - and adhere to safe and prudent policies. A law can readily be changed if the object of the change is relaxation. It is more difficult to undo the financial consequences of a hasty and shortsighted decision.

Sir, I reaffirm that the Government rejects the amendment.

11.00 a.m.

Mr R. Jumabhoy: Mr Chairman, Sir, I have not been able to understand the argument put forward by the Hon. the Financial Secretary, that between a loan which is to be paid off within 10 years and a loan which is to be paid off in 40 or 60 years, the cost of reduction in charges will be just by a fraction. Ten years, 1 to 4 or 1 to 6 difference - how can that be only a fraction? What the other side of the House is trying to emphasise is this. [Interruption]. Why do you not get up and talk, instead of-

The Chairman: Order. The hon. Member should remember to address the Chair.

Mr R. Jumabhoy: Yes, Sir. I do not like to be disturbed at the same time, Sir.

Our argument is that the cost of power or water should be brought down to such an extent as will reduce the cost of living of the working class, and will also encourage industry. That is our argument - to help the workers and industry, which will be most beneficial to the colony.

The Hon. the Financial Secretary has said, Sir, that out of $250,000,000 of loans existing of the Municipality, $25,000,000 had been collected in Singapore, subject to correction of course-

Mr Hart rose -

The Chairman: Is it a point of order?

Mr Hart: If I may explain, Sir, I said that at the present date, of $250,000,000 all but $25,000,000 had been obtained since the war.

Mr R. Jumabhoy: Thank you for that information but I said the main worry of the Financial Secretary is this, that in the present position or in the future it will be most difficult for the City Council to get loans floated in this market and you have got to go overseas - to the banker or the financier. The financier will first like his own safety by giving only short-term loans at a reasonable interest of course, the maximum he can get with good security and to get the money safely back to reinvest again. Now here the Government is looking to the financier's interests only, or possibly it is that the Singapore City Council will not have much credit left in the future and it will not be able to raise a longer-term loan. If it is to safeguard their own overseas investor to get the money redeemed as early as possible, well, and if that is the idea, let him say so.

Mr John Ede: Mr Chairman, I should like to answer some of the points which have been made by the Members of the Government. If it is an occupational disease of the Hon. the Financial Secretary to be a pessimist, I have no doubt he feels it is an occupational disease of the Opposition to be optimists, and we feel that we should look at the more optimistic side of this question. He did suggest, Sir, that I was simplifying matters in the example I gave of the power station being extended for a period of 40 years, and in fact I did say that on Friday; I had deliberately left out the question of payment of interest because it would have complicated the whole issue in trying to put it as simply as possible before the House. I do admit that this is certainly the case, but it has brought out, I think, from the Hon. the Financial Secretary the calculation that in fact a fraction of a cent on the unit price of electricity would have been saved if this principle had been adopted previously and which we seek in our amendment. One assumes that it was only a fraction of a cent spread over every consumer, but if this saving was used as a reduction of the price of electricity for purposes of industrial power, then that saving would, I think, make a very great difference. Even the saving of half a cent, when spread over five years in the calculations of an industrialist intending to set up a factory in this area, would involve an amount which would be quite considerable.

The other point which the Hon. the Financial Secretary made was that possibly this fraction of a cent, as he put it, could only be used in stabilising prices when the costs were rising. But that in itself would be an advantage if that happened to be the position.

The Hon. the Minister for Communications and Works, who does not very much like loans at all apparently, suggested that the way of meeting the thing was to spread the loan by increasing the number of consumers. And of course that is the point: we will increase the number of the biggest consumers, namely the industrialists with their factories, if the cost of power is reduced. Sir, all we have said is that any cheapening of power or water can be one factor in helping industrial expansion at a time when we desperately need it. We do not say that if this amendment is accepted we can then look forward to a glorious millenium ahead of us. That of course will be a gross exaggeration.

I regret, Sir, that the Hon. Minister for Commerce and Industry has suggested that there were irresponsible statements being made on this side of the House. We have put forward this amendment in full responsibility and have made no irresponsible statements on this matter. We put them forward as a contribution to greater flexibility in our financial and industrial future. Sir, I do not think the Government - or a certain number of Members of the Government - still realise that the City Council cannot just go out and float loans without authority. There is the safeguard there, the safeguard in clause 78:

"The City Council may, with the sanction of the Governor in Council, borrow such sums or any part of such sums as may be required..."

There is clause 79:

"Where the City Council is authorised to borrow money it may, subject to the consent of the Governor in Council raise the money..."

by various ways. Finally, clause 81:

"Every sum borrowed under section 78 of this Ordinance shall be redeemed within such period not exceeding sixty years as the City Council, with the sanction of the Governor in Council, may determine".

All we are asking in this amendment is that there should be greater flexibility written into the Bill itself in the interests of the country as a whole but with the safeguards still remaining.

Mr J. M. Jumabhoy: Sir, I do not want to answer the hon. Member for Tanglin because I think all the points which he has made again have already come out in the debate, except to say that my statement about irresponsible politicians if he takes to fit him, he is welcome to it. I did not direct my statement at any particular Member in this House but to general irresponsible politics in Singapore.

But it has come out, Sir, in the debate that there is a little bit of misunderstanding of the word redemption. Now redemption normally would be taken to mean repayment but it is not really so. Repayment period is the number of years for which you have floated a loan and you have to repay the loan in those years: Whether the Government wants to play ball with the capitalists and ignore Socialist principles, or whether Government looks after the interests of the rich men who are going to contribute to the loan, has nothing to do with the matter in hand. Any Government or City Council which has issued a loan for a number of years has to repay that loan within those number of years. It is a legal contract which is given out in the prospectus and when the investor buys the loan or debenture he expects to get repaid within the number of years that is promised to him. So that has nothing to do with the redemption. Redemption is the number of years on which you fund your loan. The repayment period may be 20 years but you can redeem your loan over 40 years. So by the time you come to the 20 years you have to find the money to repay that loan but your sinking fund is not up to the full value, it is only up to half value or less probably, according to complicated calculations of compound interest and so on. Therefore when you come to the 20 years you find that you are vastly short of the money you have to pay and you have to get that money either by again going on to the market or through some other method. Therefore I just want to make it clear that it is not that the Government is looking after only the interests of the rich men because any Government or City Council which has issued a loan for a number of years will have to repay it in that period. It is a legal contract and there is no escape from it. It is only the matter of redeeming, the funding of the loan, that we are discussing now.

Question put, "That the words proposed to be left out, be left out."

The Committee divided: Ayes, 7; Noes, 22; Absent, 3. Ayes. Noes. Goh Tong Liang. Abdul Hamid bin Haji Jumat. Ede, John. Ahmad bin Ibrahim. Jumabhoy, R. Braga, A. J. Lim Choon Mong. Chew Swee Kee. Lim Koon Teck. Goh Chew Chua. Soh Ghee Soon. Hart, T. M. Tan, William. Jumabhoy, J. M. Lee Choon Eng. Absent. Lim Cher Kheng. Lazarous, A. R. Lim, R. C. H. Lee Kuan Yew. Lim Yew Hock. Lim Ching Siong Mak Pak Shee. Mohd. Sidik bin Haji Abdul Hamid. Nair, M. P. D. Ong Piah Teng. Seah Peng Chuan. Shanks, E. P. Stewart, S. T. Sutherland, G. A. P. Tan Theng Chiang. Thomas, Francis. Wong Foo Nam.

Amendment accordingly negatived.

The Chairman: I take it the hon. Member for Tanglin is not moving his next amendment?

Mr John Ede: No, Sir. I shall not move my next amendment. [In page 107, lines 19 and 20, to leave out "under section 78 of the Ordinance".]

Amendment made: In page 107, line 19, to leave out "78" and insert "79".-[Inche Abdul Hamid.]

Clause 81, as amended, ordered to stand part of the Bill.

Clause 102-

Inche Abdul Hamid: Mr Chairman, I have an amendment to move, In page 115, line 34, to leave out from "thereto" to the end of line 35 and insert:- ": Provided that no such modification, rejection or addition is inconsistent with this Ordinance and further provided t hat any proposal to increase expenditure or reduce income which has not already been considered by the District Council Finance Committee shall stand referred to that Committee for report to a subsequent meeting of the Council."

Sir, if hon. Members will refer to clause 72 (2) they will observe that this amendment follows the same wording and makes provision for financial matters to be referred to a District Council Finance Committee. Members will recall that special provision has been made in this Bill for local authorities to appoint financial committees.

Amendment agreed to.

Clause 102, as amended, ordered to stand part of the Bill.

Clause 108-

Inche Abdul Hamid: Mr Chairman, I have an amendment to move,

Cap. 202 In page 117, line 23, after "Ordinance", to insert "and an Education rate under the provisions of section 5 of the Education Ordinance".

This is to correct an omission. Sir, as an education rate is collected under the provisions of the Education Ordinance in the same way as an improvement rate is collected under the Singapore Improvement Trust Ordinance.

Amendment agreed to.

Clause 108, as amended, ordered to stand part of the Bill.

Clause 109-

Mr John Ede: Mr Chairman, I beg to move, In page 119, line 31, to leave out from "City" to the end of line 45.

Mr Chairman, the purpose of this amendment is to try to remove from the Bill some of the confusion which the Government has caused by its illogical policy of tinkering with the limits of the City and District boundaries. It has firstly brought a rural area into a primarily urban area by bringing in parts of Pasir Panjang and Ulu Pandan to the City; secondly, pushed a primarily urban area into a rural area by expelling part of Katong into a District Council; and thirdly, divided up a homogeneous rural area, Braddell Road, into two by pushing one section to the North of the road out to the District Council while retaining the section to the South in the City Council. There is neither rhyme nor reason nor consistency in these moves, and the attempt to fix the rates to suit these manoeuvrings is equally Gilbertian.

Let us turn to the clauses concerning the fixing of rates. There is firstly clause 108 (3) which reads as follows:

"No such rate as is specified in subsection (1) of this section shall exceed in the aggregate in one year thirty per centum of the annual value of the property rated:

Provided that in the case of a District Council such rate shall not, without the sanction of the Minister in writing, exceed in the aggregate in one year fifteen per centum of the annual value of buildings and five per centum of the annual value of land."

In other words, the City Council will have an unfettered ceiling as before of 30 per cent. The District Councils will have a similar ceiling but they may not go beyond 15 per cent or five per cent without the special sanction of the Minister in writing. Clause 108 (4) gives local authorities powers to vary these rates in different parts of their own areas. In other words, a rural area with no services can be rated lower than a more urbanised area in the rural area with some or all of the Municipal services such as water, gas, electricity, roads, street lighting and so on which increase the annual value of the property. In other words, in this sub-clause (4) you have differential rating already provided for. It appears, however, from clause 109 that the local authorities are not to be trusted and that the Minister wishes to step in and use his powers.

On the one hand under clause 109 (1) (a) the Minister can insist that the rates of a new rural area coming within the City Council limits are to be paid at the previous rates, that is 20 per cent or below. As this area Ulu Pandan-Pasir Panjang is largely rural, and as restrictions will be placed on an essentially attap house area when it is brought within the City Council, we are prepared to accept this pegging of the rates solely on the grounds that it is a form of protection to the have-nots, although we do not really see the fundamental reason for it, or that it is in fact really necessary.

But on the other hand, under clause 109 (1) (b), the one to which we refer now, the Minister can insist on the rates of an area banished to the District Councils being pegged at 30 per cent or whatever the City Council may have fixed in the past. In this category you have two have-not areas. You have the people of Katong which will be downgraded to a District Council and, as the Government freely admitted in Select Committee, will have the status of a rural board with no powers over its finances, with no staff, no powers to create its own posts, and yet will be made to pay 30 per cent. And you have the farmers north of Braddell Road who are to be separated from their own community south of the road and pushed into the District Council whose rates can also be interfered with by the Minister. This attempt at meddling with the rates when the whole matter can perfectly be well left to the good sense of the local authorities and their elected representatives under their own powers in clause 108 (3) and (4) is going to cause a great deal of dissatisfaction.

And the people in Joo Chiat Road, who are shortly to find themselves in the rural District Council of Changi, are going to have a considerable grievance if the Minister pegs their rates at 30 per cent on a par with their former friends in say Tanjong Katong Road, who will still enjoy the administration of the City Council. I am surprised that the Hon. Minister for Health has allowed himself to be a party to this kind of thing in his own constituency. If this splitting of Katong into two is to be tolerated, then at least the Changi half should be given the consolation of knowing that their own elected representatives on the District Council can have a say in what the rates should be under clause 108 (3) and (4), and not be dictated to by the Minister under clause 109 (1) (b).

Equal grievances are likely to arise in the Ulu Pandan area. The newcomers into the City will have their rates pegged down to their present percentage whereas the many farmers already living in rural area districts within the City Council boundaries may be made to pay higher rates. And that gives you another form of discrimination.

We come back to the fundamental point. Rating should not be based on boundary lines which are of an imaginary nature drawn across the map by master planners. Rating depends on the annual value of the property which is itself based on the services and amenities which a local authority can provide. And if you have a local authority with no powers over finance, officers or staff, you cannot charge 30 per cent rates. If you wish to be consistent, therefore, you must leave rating to a local authority to work out over the whole of its area, and incidentally you must provide the District Councils with assessment departments and assessment officers and assessment committees so that the rating is done fairly. The interference implied by this clause 109, particularly as it will be covered and can be covered in clause 108, is undesirable and we oppose it.

11.30 a.m.

Mr Stewart: Mr Chairman, there is nothing inconsistent between clause 108 (3) and (4) and clause 109 (1) (b). Clause 108 (3), Sir, is a general rating provision whereas clause 109 (1) (b) is a special rating provision. Under clause 108 (3) the ceiling rate is not applicable to a part of the local authority area only; it must apply to the whole local authority area. It is only after the ceiling rate has been fixed that the local authority can impose differential rating in different parts of the area.

The explanation of clause 108 (3) and clause 109 (1) (b) is, I think, quite simple. Both clauses are necessary. A local authority, say the new Katong District Council, applies to the Minister under clause 108 (3) to raise the ceiling rate in its area from 15 per cent to say 20 per cent. The Minister refuses to allow the imposition of this increased rate throughout the whole of that area but that does not prevent him at the same time from ordering, under clause 109 (1) (b), that the new area or part thereof within the limits of the Katong District Council should be rated at 20 per cent or even 30 per cent, because of the greater public services which will be continued in that area. I think the Member for Tanglin was wrong when he said that the services of the local authority - the services which shall be provided in the Katong area - will be diminished or will be reduced or will be less. That will not be so, Sir. The intention is that all the services that are provided for in the Katong area will continue to be provided. The Minister may order that a higher rate there should be imposed.

Sir, the Member for Tanglin in passing mentioned that there are certain rural areas within the present limits of the City which are paying 30 per cent. Under the existing Municipal Ordinance there is no differential rating within the Municipal areas; it is 30 per cent throughout. But under this new Bill we have made provisions, by virtue of clause 108 (4), by which it is possible for the new City Council to impose a lower rating in the less developed parts of the City area. That will dispose of his argument that the new rural areas which are being brought into the City area will be paying lower rates, and he agrees that these areas should be pegged at lower rates. I would say to him that it is now also possible for those rural areas within the present parts of the City to be pegged at the same rates as the rural areas which are to be brought in if the City Council now wants to do so. For these reasons I oppose the amendment.

Mr John Ede: Mr Chairman, the Hon. the Chief Secretary has just stated that in Katong the public services that are enjoyed in that area will not be diminished but will continue to be provided as at present. How will this be done, we should like to know, when it is admitted that the services in the District Councils will be pursued and followed on Rural Board standards and that there will be no officers in the District Councils responsible to the District Councils but they will be responsible to the Government itself?

Mr Stewart: Mr Chairman, Sir, for a transitional period the Minister may direct, under the transitional provisions, that the City Council will continue to administer the area of Katong which is to be transferred to the District Council, and I think the Minister mentioned this in his speech last week in this Assembly. Sir, you will also remember that four or five of the most essential services in any District Council area will still be administered by the City Council on an island-wide basis; whether Katong is inside or outside the City area, services like water, sewerage, electricity and gas will continue to be administered by the City Council on an island-wide basis. There will therefore be no diminishing of such services in any part of any District Council area in this respect; so also with the fire and ambulance accident services, which will also remain island-wide services.

Sir, when the Katong part of the present City area is taken over and administered by the Katong District Council after its transitional period, the District Council will administer those services which are not island-wide services. And what are these? They are scavenging and conservancy, maintenance and construction of roads, drains, licensing of various trades, health, looking after nuisances, etc. - but these are services which are already being carried out as well in the rural areas by the Rural Board as in the City by the City Council. The staff of the Rural Board is now in the process of being divided up and spread among the three District Councils which in future will take the place of the Rural Board. These District Councils will have their staff. To say that they will have no staff, no offices, is not correct. They will have their staff except, as we have said, that for an interim, initial period, the staff will be Government servants. But the staff will be there. You will have the same Rural Board staff, augmented if necessary by increased strength or even transfer from the City Council. And these services will go on being provided. To say that they will not be provided and that it is not possible to see how the District Councils are going to be provided with services is not relevant, I think, Sir, and the argument is weak because these District Councils will certainly have staff. They will have their estimates of revenue and expenditure; they will have their own offices, Sir. I can say that priority will be given to building these offices. So I cannot see why the Member for Tanglin is harping on this lack of services, staff and office buildings. These services will still be provided by the District Councils when they take over the Katong part of the present City area after the transitional period.

Mr John Ede: Mr Chairman, the Government has had to admit what it does not like to admit, namely that, as a result of moving Katong into the District Council, the area of Katong will not be administered by the District Council because it is not ready for that to be undertaken, but that the City Council will administer Katong for what is now said to be six to eight months and not, as the Minister said in Select Committee, for three or four years. And that is the whole point, that the public services that are given to Katong will not be properly administered so long as you have your elected representatives of Katong sitting in the District Council while the City Council will carry out the administration. The elected representatives of Katong will have no control over the services which are going to be provided by another body. Why should not these elected representatives sit on the City Council so long as the City Council is going to administer them? The whole thing is completely upside down and an insult, and the reason simply is that the Government is putting into action a Bill on which it has not given sufficient thought and to which it has not given time to make a proper job of this whole thing. It cannot be said that the area of Katong is going to get the services which it should get, because the elected representatives will not be there to see that it gets them.

Therefore we feel very strongly that there is no point to this clause 109 and certainly not to sub-clause (1) (b), that the matter is perfectly well covered by clause 108; and because there is no proper control over Katong by its own elected representatives it should be the elected representatives in the District Council who should have a say in what the differential rating should be, and it should not be altered by the Minister exacting rates if it is not getting the public services.

Mr Stewart: Mr Chairman, I thought under this amendment we were discussing rating and not the question of why the Katong area, or the district which is to be handed over to the Katong District Council, should be administered during this transitional period by the City Council. I thought, Sir, that this would be discussed and debated when we come to the amendment which the Member for Tanglin has given notice of, and that is the amendment on transitional provisions. We can debate it there but we are now discussing rating and I still say that both clauses 108 (3) and 109 (1) (b) are not inconsistent with one another.

Mr John Ede: I would just like to say that rates and services are of course very closely related.

Amendment negatived.

Clause 109 ordered to stand part of the Bill.

Clause 143-

Mr John Ede: Mr Chairman, I beg to move an amendment,

In page 143, line 3, after "authority", to insert: -

", provided that the provisions of this subsection may apply to private streets of a width less than thirty-six feet if the local authority in special circumstances thinks fit".

Mr Chairman, in moving this amendment to clause 143, and in order to explain our intentions, it will be necessary to elucidate the meaning not only of this clause but also that of clauses 144, 145 and 146 as they are related. I will try to express these seemingly complicated clauses in as simple language as possible.

We are dealing, Sir, with private streets and the problems of having them made up as public streets to the advantage of the owners or occupiers and the general public. Clause 143, the one to which the amendment before us refers, concerns the power of a local authority to require a private street to be made up according to local authority specifications and the cost of it met by the frontagers in proportion to the extent of their frontages. The first sub-clauses do not specify any particular width of street but sub-clause (14) states that in the case of a street 36 feet in width or more the frontagers, or a majority of them, can demand that the street, having been duly made up, be taken over as a public street, and the local authority cannot refuse to do so. In other words, in this clause the frontagers, if the majority of them agree, must take the initiative if they want their street to be made a public street provided - and this is the point - the street is not less than 36 feet in width.

11.45 a.m.

Clause 144 is different. In this clause if a private street of any width has been made up to the proper specifications the local authority, and not the frontagers, can take the initiative and notify that unless objections are lodged within a month it will declare it to be a public street.

Clause 145 refers to private streets that are less than 36 feet in width but require to be widened before they can be made up and declared a public street. Under the present Municipal Ordinance in such cases, the City Council has to obtain the approval of the Governor in Council to acquire the necessary land, and it may be buildings, in order to widen the streets; and under the present Ordinance, by acquiring let us say eight feet of land on each side of the 20-foot road reserve in order to make the road up to 36 feet in width, the City Council has itself to be the frontager for the entire extent of the street in question. In other words, the City Council has not only to pay the owners compensation for the land purchased, but also to pay for the making up of the entire road. The result has been that the City has not squandered the ratepayers' money on such double payment but has concentrated on declaring and maintaining as public streets those which are already 36 feet wide, while streets less than this width have remained in a state of extreme disrepair.

However, this section has been improved on in the new Bill in two respects. First of all, the local authority has not to apply to the Governor in Council for permission to deal with the widening of streets; and secondly in the new proviso, after the local authority has purchased land to widen a street to not less than 36 feet in width and paid the purchase price to the owners, these owners must now pay for the making up of the street before it is taken over as a public street. In other words, what they gain on the swings they lose on the roundabouts, but at the end of it they have a properly made up public street.

Clause 146 is a minor one and we may give it passing notice. The local authority may require owners on a private street to make reasonable repairs to put it in a more satisfactory state. In other words, a street less than 36 feet wide which the local authority is not intending to take over as a public street can be patched up to lower standards or specifications than are required for public streets.

Such then, Mr Chairman, is the meaning in brief of these four clauses, and unless we understand their meaning we cannot understand the purpose of our amendment. The point is this, that while clause 143 (except in sub-clause (14) ) and clause 144 do not expressly say so, the local authority has always taken the line that it will not take the initiative under sub-clause (1) of clause 143 or under sub-clause (1) of clause 144 to have a private Street made up or to declare a public Street unless it is 36 feet wide. This is tantamount to the position that a private street less than 36 feet wide is doomed for ever to be a bumpy, dusty, unmade-up street unless the local authority decides to act under clause 145, and this it will only do if it wishes to turn a narrow public street into a useful public thoroughfare.

This, Sir, is what we oppose. We take the view that cul-de-sacs or lorongs less than 36 feet wide which trail off into nowhere in particular should, in course of time, be made up and turned into public streets, and that the owners, having paid to have them made up, should have the right to demand that they be turned into public streets just as much as any other owners can.

We also take the view that too much of a fetish is being made of the need for all streets to be at least 36 feet wide. Thirty-six feet implies a need for say a carriageway of 20 feet and eight feet of land on either side for drains. This is extravagant and unnecessary in the case of short streets which are not thoroughfares and on which traffic is not fast-moving. Thirty feet, or possibly 28 feet, is sufficient for such streets, in our view. This will allow something like an 18-foot carriageway, perhaps a four-foot footpath and two four-foot box-drains, which will mean a saving in the use of land.

Two streets with a limited number of houses on them, which are not through roads, have recently been made up and are shortly to be declared public streets in my constituency. One is Sarkies Road and the other Lewis Road, both off Bukit Timah Road, the latter being well known to the Member for Seletar. Now I maintain - and I hope he will support me - that to make up these streets to a full 36 feet was unnecessary because of the limited traffic on them, and needlessly expensive, firstly to the owners who would have to foot the bill, and secondly to the City Council which has to maintain them in perpetuity.

What we wish to emphasise through this amendment is the fact that a local authority - and this may apply with particular force to District Councils which now come within the scope of these clauses (and I think that is a most important point) - is not bound to limit the making up of a private street to one that is 36 feet wide, and if streets of lesser width are made up the owners have a right to demand that they be declared public streets. It is extravagant in land and extravagant in money to insist on 36-foot wide streets while they are unnecessary, and this applies not only to all lorongs where the road reserve is say 30 feet in width, but it should apply to even some new roads. This is a matter which the Minister should take up with the Singapore Improvement Trust which is the planning authority.

Let us take for example a new housing estate. It would be reasonable to have the main road through the estate leading to the main road outside as wide as you like even of 40 feet, as it will carry most of the traffic and in course of time probably a bus service; but we see no reason why the feeder roads or the link roads, each leading to say 16 or 20 houses and ending in a cul-de-sac, should not be say 30 feet in width, and why the owners should not demand to have these roads declared as public streets.

Sir, I have spoken at some length on this issue and it boils down to this. Let us have written into the Bill the recognition that private streets of less than 36 feet in width are in certain circumstances acceptable streets, that they can be made up and that the owners have a right to demand their declaration as public streets. Unless we do this some streets will remain a disgrace for ever.

Mr Nair: Sir, we sympathise with the sentiments expressed in the speech made by the hon. Member for Tanglin but we feel that adequate provision has already been made under clause 144 (1) which states:

"If any street, not being a public street, is levelled, channelled and drained and either paved, metalled or flagged to the satisfaction of the local authority, it may, if it thinks fit, by writing under its common seal, declare that at the expiration of one month from the date thereof the said street shall become a public street."

Sir, I had the same doubts as the hon. Member for Tanglin and I discussed this matter with the Hon. Minister, and I am assured that if any street is less than 36 feet wide it can still be taken over at the discretion of the local authority. Those are the private streets which were mentioned by the hon. Member as cul-de-sacs. I feel, Sir, that clause 144 (1) is the real answer to the hon. Member's query.

I must say this, Sir, that there is no use assuming many things which in fact will not be wrong. In very many of these cases the local authority, I am sure, will give due consideration in taking over those private streets which are less than 36 feet wide.

Mr John Ede: Mr Chairman, I think the Hon. Assistant Minister is labouring under this fallacy, that clause 143 is in fact covered by clause 144. I do not think that we can agree with him on this point. Under clause 144 (1), which has just been read out, the initiative of having a street declared a public street must be taken by the local authority. Now it is in clause 143 (14) that provided that a street is 36 feet in width, then when it is made up the owners or occupiers can demand that the street be made a public street and the local authority cannot resist that demand; it must carry it out and have the street declared a public street. The initiative in clause 143 lies with the owners or occupiers who have gone to the expense of having the street made up, but clause 144 is quite different. It states that the local authority must take the initiative.

Our point, Sir, is quite clear. I did go into some detail into the difference between these four clauses in order to establish it. Our point is quite clear. We want, under clause 143 where the initiative lies with the owner or occupier having made up his street to get it made into a public street, that that shall also apply in cases where it is reasonable, such as cul-de-sacs and lorongs and so on, where the owners or occupiers, having made up a street less than 36 feet in width can demand their right that this street be declared a public street. There is a fundamental difference between these two clauses.

Mr Francis Thomas: The hon. Member, Mr Chairman, who has been very fond of alleging inconsistencies on the side of the Government, has showed us an inconsistency here, where the elected representatives of the people on the District Councils and the City Council are to be deprived of their initiative as to whether a particular street should or should not be made public. The power is to be taken away from the elected representatives and given to a few private individuals, and perhaps even to one single capitalist. Surely this is a terrible attack on the principles of democracy which have been so ably expounded earlier, that the elected representatives should have all the powers and none go to anybody else. Here we have the initiative as to whether a street should be public or private taken away from the local authority and given to the residents, the frontagers on the street.

Mr John Ede: Mr Chairman, I must say that this is a most extraordinary statement by the Hon. Minister for Communications and Works. This clause 144 concerns the making up of public streets which the frontagers have themselves paid for. Therefore under this sub-clause they have the right, as they have had for a very long time, to ask the local authority - the elected representatives who carry out the work of the local authority - they have the right to ask, and not merely to ask, to demand -

Mr Francis Thomas: To demand!

Mr John Ede: - that their street should be made up. And that has been in existence for many years. I do not see the point at all of the Minister's remarks.

Mr Lim Choon Mong: I am not an Englishman but it seems that the amendment states in very clear English:

"provided that the provisions of this subsection may apply to private streets of a width less than thirty-six feet if the local authority in special circumstances thinks fit".

I repeat "if the local authority in special circumstances thinks fit".

This, Sir, leaves the power entirely with the local authority. We are not taking any power from the local authority but giving them a discretion, and that discretion has been added in order that unnecessary expenses may be saved. When we make up roads we always think about the use of such roads. Will it be a main thoroughfare serving thousands of vehicles, or will it be just a small road serving probably a couple of hundred cars, or will it be just a small little lane serving a few cars and plenty of bicycles and pedestrians? I think, Sir, the question of cost must be related to use, and this clause here gives the local authority just that discretion. If in the circumstances it thinks that the use will not justify the cost then that local authority can say, "We will have a narrow road"; but if it thinks that the use is so much greater and we must make adequate provision, it can under this provision, say no. And having given that extra power of discretion to the local authority, I do not see there is anything that anyone can object to. It is not subtracting from the local authorities but adding to them.

12.00 noon.

Mr Stewart: Mr Chairman, Sir, the Member for Tanglin for whose knowledge of local government working and the keen study he has given to this Bill I have a healthy respect, has given a very fine, simple explanation of the different clauses relating to the making up and repair of roads. But I think he is labouring a little bit too much on this difference between clauses 143 and 144. If you will see, Sir, his amendment is only permissive, and if it is only permissive there does not seem any point in making the amendment. If under clause 144 a local authority has decided that it will only take over private streets not less than 36 feet wide, if you put this amendment in clause 143 and say that provided that the provisions of this clause may apply to streets less than 36 feet wide, the local authority has already decided it will not take over anything under 36 feet wide. So there is no point in putting this permissive clause here. A new local authority may however decide it is prepared to change the policy of its predecessor and perhaps accept roads which may well be less than 36 feet wide. It is left to the local authority to say. It is a discretion, Sir. I think the Member has been critical of the in-roads being made by the Government or the Minister into the powers and functions of local authorities. He would appear to contradict himself in wanting the Government to reduce the discretionary powers of the local authority. I think a new local authority if it wants to take over streets less than 36 feet wide can do so. And even under clause 143, without the amendment, if the owners write to the local authority to take over the street, although it knows the street to be less than 36 feet wide and the Bill is quite clear on it, yet if the local authority has changed its policy it will still entertain that application, Sir, and take action on its own initiative under clause 144.

Mr R. Jumabhoy: Mr Chairman, Sir, I just want to ask the Hon. the Acting Chief Secretary one question. Under this clause whether power is given to a local authority to take over a street if it is under 36 feet. What I want to ask is -

Mr Stewart: Point of clarification, Sir. May I ask the hon. Member which clause he is referring to?

Mr R. Jumabhoy: The clause in question, Sir, and the explanation given just now by the Acting Chief Secretary. What I want to ask is this. If the frontagers of a street which is less than 36 feet wide level the street up and have it properly done, have they the right to demand from the local authority to declare that street as a public street? That is the question.

The Chief Minister: Mr Chairman, the proviso proposed by the hon. Member is very clear. It says that while the residents there have the right to demand, yet the discretion lies with the City Council. Here we have the hon. Member for Telok Ayer asking whether the residents have the right to demand and to have that demand acceded to!

The point brought out by the hon. Member for Tanglin is that in the case of clause 144 the initiative lies with the City Council but with this proviso, he hopes that if the proviso is accepted the initiative will therefore lie with the residents. They will therefore have a right to demand whereas it is still left to the City Council to exercise its own discretion. Surely under clause 144 the residents at any time can demand by themselves or through their own representatives to have a street in that area less than 36 feet wide to be considered by the City Council to be taken over as a public street?

Mr John Ede: Mr Chairman, I do not want to take this point too far but there is another problem, of course, related to this other business, and that is that in these days the Singapore Improvement Trust is the planning authority with regard to the width of streets and the authority is not in the hands of the local authority at all. Nevertheless the S.I.T. has built streets in some of its housing estates - Tiong Bahru, for example - which are less than 36 feet wide, and it has exercised its right I think under this clause 143 that the City Council take them over as public streets.

The point we are getting at is that the tendency has been that our planners regard 36 feet width as essential for any type of street, and through this amendment we seek to establish that this is absurd. As I have illustrated in a number of cases there are possibilities in new housing estates and in old lorongs which lead to only a certain number of houses, in which in our view a width of less than 36 feet would be entirely desirable and entirely adequate. And I think it is somewhat important in this growing Island of Singapore that we should not waste land unnecessarily or the expense of making up roads where there is no real necessity for streets 36 feet wide. That is the point I make, that there is now this fetish that everything must be 36 feet in width regardless; and our intention is, as I said, to have written into the Bill a recognition that private streets of less than 36 feet in width are in certain circumstances acceptable streets. And that is not the position at present.

Mr Lim Koon Teck: It is very difficult for me to understand why Government should object to a permissive provision to be incorporated into clause 143. The Minister for Communications and Works completely went off the point by mentioning demand. There is no demand; there is no possibility of demand. It is a provision to show to the officials who will be in charge of administering the planning and taking over of streets that such a thing is allowed under clause 143. I think it is very important that the officials should be reminded that there is power because I have come across many cases where the answer is, "Oh, this section says you cannot; no street under 36 feet wide can be taken over, and that is the end of it." When you are dealing with officials, many of them will not be concerned with the interpretation of clauses 143, 145 and 146, and I cannot possibly understand why Government should object to this permissive provision to make the clause clearer to be incorporated into the clause.

The Chief Minister: Mr Chairman, Sir, the Government is not objecting to any permissive clause. We are trying to explain that under clause 143 it is obligatory on the part of a local authority to take over any public street that is 36 feet wide or more; and under clause 144 it looks after streets less than 36 feet wide - it is a permissive clause.

Mr Stewart: Mr Chairman, Sir, I would like to touch on the point about the Singapore Improvement Trust which the hon. Member for Tanglin has mentioned. It is true that the S.I.T. as the planning authority requires a street to be made up to 36 feet wide but the S.I.T. is not the authority to say whether that street should remain a private street or a public street.

Amendment negatived.

Clause 143 ordered to stand part of the Bill.

The Chairman: I think this is an appropriate time to suspend?

Hon. Members: Yes.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the Assembly.

Mr Speaker: The Assembly is suspended until half-past two.

Sitting accordingly suspended at 12.12 p.m. to 2.30 p.m. Sitting resumed at 2.30 p.m.

Order read for resumption of consideration of Bill in Committee.