ANNUAL BUDGET STATEMENT

Order read for resumption of debate on Question [29th November, 1960], "That the Assembly approves the financial policy of the Government for the year 1961."

Question again proposed.

2.33 p.m.

The Parliamentary Secretary to the Prime Minister (Mr Chan Sun Wing): (In Mandarin): Mr Speaker, Sir, on behalf of the electorate of Upper Serangoon constituency, I support the motion of the Minister for Finance which reads, "That the Assembly approves the financial policy of the Government for the year 1961."

The long Budget Statement delivered by the Minister for Finance in this House on 29th November, 1960, gave a penetrating and objective analysis of the financial and economic situation confronting the self-governing State at present and in the years ahead. In the colonial era and the era of the Lim Yew Hock Government, there has never been such a Minister for Finance who could have given such a comprehensive and substantial analysis of the financial and economic situation confronting the people of Singapore. From the economic point of view, had the Minister for Finance given us in his Statement approximate figures of the profits derived locally by foreign enterprises in the past one year, and had he told us what percentage of their profits they were prepared to re-invest locally, then his speech would have been more complete, though perhaps we have no such need. But anyway, we must thank the Minister for Finance for his great effort in handling the finance and economy of Singapore in the past one year. He has pointed out to the people of Singapore the right way of overcoming the financial and economic difficulties through their own effort. The people can see, from his review of the conditions of economy and trade in our State this year, that in the 1½ years of office, the P.A.P. has not only brought about an unprecedented stable political situation but also a new situation of increased trade and expansion in production after a short period of economic standstill. Our Friends on the Opposition strongly put forth their propaganda that when the P.A.P. gained power, factories would be closed and trade would come to a standstill. This phenomenon has not come about at all. Of course, we have no reason at all to be too satisfied, because the increase in trade and the expansion in export still cannot raise the living standard of the workers and labourers. Our rapidly increasing population gives us many problems which are difficult to settle.

However, I think it is necessary to emphasise the realistic policy adopted by the P.A.P. Government in dealing with the economic problem. The P.A.P. believe in a society where there is no exploitation. However, we will not be so blind as to enforce radical socialistic and economic measures, because this will unnecessarily upset the social and economic order or structure. According to the Budget Statement of the Minister for Finance, our industrialisation programme will be carried mainly through the system of private and free enterprise. Thus honest capitalists need not worry about their capital investments not being protected by political measures.

The working classes of Singapore, as a whole, have fully understood the situation in Singapore and have expressed their tolerance and wisdom in their struggle for better living conditions. During the past year, without their co-operation, the manufacturing industries and trade could not have expanded. Generally speaking, the working classes are not to be blamed for industrial unrest under the free enterprise system, except a few of them. In my opinion, so long as the capitalists and employers give their employees reasonable pay and reasonable working conditions, the workers of Singapore will shoulder their responsibilities to proceed with their production work for the sake of the State's prosperity.

In the debates today and the coming days, our friends on the Opposition will certainly scratch their heads to think out some minor points in order to attack the Government, so as to pretend that they are the champions who fight for the welfare of the people. I maintain that they are all short-sighted people. No matter how or what they say, even when their lips become dry and their tongues get parched, they will not be able to show their talents in order to convince the people. Surely they will exaggerate and attack the Government, saying that it has given the people a burden to shoulder in respect of the tax proposals put forth by the Government. But, in fact, the Minister for Finance has already pointed out that in the eight new taxes of $10½ million, only $750,000 will be directly derived from bachelors whose income is less than $310 per month, or from those families whose income is less than $500 per month. What is more important is that all the revenue from these new taxes will be completely spent on the social welfare of the people as well as on the economic development.

Mr Speaker, Sir, while reviewing the financial conditions of our State, I think it is necessary to comment on several points. Firstly, at present, the two countries - the Federation of Malaya and Indonesia, which are inseparable as far as our State's economy is concerned - are pressing ahead along their own courses they have chosen. It is not an easy task to maintain and promote efficiency in the co-operative offices in these territories under these complex circumstances. The efforts put forth by our Minister for Finance in this respect deserve our appreciation. Secondly, up to the present moment, capitalist countries have not given us any positive and practical assistance. In the apportionment of finances for our future development plan, our Minister for Finance has said that he has no undue hope for foreign finances. This is very proper and correct. Thirdly, the expenditure of the various departments in 1960 is less than the estimated expenditure by $37 million. Naturally it is partly due to the savings in the administrative expenditure. On the other hand, it also shows that our State lacks highly skilled technical people. At present the Government has the responsibility of recruiting technically skilled people either from overseas or locally in order to fill these vacancies. By our long-term plan, those scholars at present studying abroad or in the local universities should try their best to equip themselves with knowledge and skill so that they may be able to shoulder the heavy task of improving the living of our people.

Mr Speaker, Sir, I support the Government's financial policy.

2.48 p.m.

Mr C. H. Koh (Joo Chiat): Mr Speaker, Sir, Government has presented us its Budget as a pattern of a fiscal policy; and it is a P.A.P. Government, as the Hon. the Minister for Finance repeatedly rammed down our throats at every turn of his speech. Not the Singapore Government, but the P.A.P. Government, and the P.A.P. Government is allegedly a Socialist Government. And what have they produced, Mr Speaker, Sir? If this is a socialist Budget, all I can say is: I cannot see the sheep for the wolf's clothing. What I see is just the wolf - a Budget to tax the poor and some of the rich, a Budget that has no provision whatsoever for the unemployed who are tragically increasing in numbers, a Budget that has no provision whatsoever for the under-employed, a Budget that does not even take into consideration the retired worker who at the end of a long and useful life finds himself no longer able to work and, like a squashed orange, is thrown into the gutter. Not one word of old age pension, or unemployment insurance in this P.A.P. Budget. "Asians", says the Hon, the Finance Minister, "no longer accept poverty as the natural order of human society." That is in Hansard, Vol. 14, No. 1, col. 12, paragraph 2, Mr Speaker. Must Singapore accept it?

The Hon. the Minister for Finance says in col. 40, paragraph 1:

`...there is every hope that if we increase the inducements and facilities for private capital investment, we have every chance to achieve a sufficiently high rate of growth to provide work for our growing population.'

Let us examine that. Despite what he calls "improved conditions" in trade and industry and the impetus that he alleges the P.A.P. has given, the figures he indicates for the last 18 months show employment for only 1,049 workers in new small industries and the total anticipated employment, if all the `pie-in-the-sky' projects are achieved at a cost of over $100 million, is employment for 2,500 workers, and if we add to these projects still vaguer possibilities of all the enquiries and assume that each and every one of them eventuates, the total number of employment on these would be 2,000 - 1,049 already employed, and a probability that 2,500 may be employed in the years to come.

How does the Minister equate these facts with his assertion that the rate of our industrial growth will meet the needs of our growing population?

The Minister for Finance (Dr Goh Keng Swee): I never said that!

Mr Koh: `a sufficiently high rate of growth to provide work for our growing population.' I am not suggesting that industrialisation is not valuable. It is, Mr, Speaker, Sir. But it is important that the Government should recognise and that the people should know that the maximum possible industrialisation in the most favourable circumstances cannot employ more than 10 per cent of our unemployed. Let us not increase the tragedy of those who suffer idleness at present through no fault of their own, by pretending that they will get employment, and deluding them into hopes that can never be achieved. We ought at least to tell the truth to this tragic sector of our population even if we cannot help them.

The Hon. the Minister for Finance has also spoken with roseate optimism about the future of our trade and commerce. There is not one single businessman I have spoken to who does not state categorically that our economy is sagging. Nothing dramatic - just sinking quietly like a ship in a calm sea; and yet it has been the unusual good fortune of this P.A.P. Government to have a tremendous boom in the Federation which would normally have meant a boom of considerable prosperity in Singapore, but which has only succeeded in cushioning the depression which has set in with the advent of the P.A.P. Government, a depression which progressively saps our economic structure. It is a pity there is no businessman in the P.A.P. to tell them the facts of life. Figures are helpful, but statements like "There is a solid and substantial revival of the economy this year" based on selected figures, are wholly misleading and unfair to the people, Mr Speaker, Sir.

Dr Goh Keng Swee: Three!

Mr Speaker: Order. If the Hon, the Minister for Finance wishes to elucidate, he might try; but he should not interject from his seat.

Mr Koh: There is one small item I must touch upon and that is the Workers' Brigade.

The Prime Minister: Works Brigade!

Mr Speaker: Order.

The Prime Minister: Sir, on a point of clarification.

Mr Speaker: If the Member will give way.

Mr Koh: Very well.

The Prime Minister: I think it would help considerably all round in our appreciation of what the Member for Joo Chiat hopes to contribute to the economic thinking of this country, if we refer to things by the names they are referred to in the Budget and in the newspapers.

Mr Speaker: I did not quite catch the point raised.

The Prime Minister: Sir, in the Estimates, in the Budget speech and in the newspapers, there are references made to the Works Brigade. If we are to coin new nomenclatures for the same or different things, then perhaps we might get ourselves lost well before the Member for Joo Chiat is finished in the next few minutes.

Mr Koh: Mr Speaker, I do not wish to go down to the personal level; but names, names and names. Is that all what the Prime Minister is capable of saying? What does it matter whether it is the Works Brigade or the Workers' Brigade? What is in a name? It is really the merits that count. The P.A.P. Government has changed so many names in this country that we are apt to get a headache. I feel like calling some names too, but I think I had better not digress.

However, it seems to me, Sir, that the establishment of the Works Brigade and the work it is doing negates the basic principles of trade unionism. The Works Brigade is cheap labour at below the market rates for Government projects. In the long run, this is an unhealthy approach to the needs of the country and one to which the trade unions of the country should awaken.

Dr Goh Keng Swee: On a point of information.

Mr Koh: No, Sir, I do not wish any more interruptions. It is the duty of Government, as an employer, not to undermine the trade union movement by a reserve of cheap labour, but to pay in full for the services it receives.

One other matter on which I must touch is the question of the treatment of the civil servants, and the tender generosity of the Government in stating that they are willing to have negotiations for partial restoration of variable allowances; or is "restitution" the word used instead of "restoration"? I cannot remember. It is a tragic farce that Government should offer to give the civil servants a very small percentage of what is their rightful due with one hand, and then take it away in their increased taxation with the other. And what is more deplorable, Mr Speaker, Sir, is that there is in existence a freely negotiated agreement between the Government and the Civil Service for arbitration on pay and conditions of service, and the civil servants have pleaded earnestly for an Arbitration Tribunal to be appointed to consider their legitimate complaints about the manner of the reduction of variable allowances and about the need for such reduction in the light of the Surplus Budgets of the P.A.P. Government. Despite the formal agreement freely negotiated, the Government refuse to arbitrate because they state that this is a matter of policy. I am reminded of the story of the Chinese cook in a Muslim household, who was in no uncertain terms told that pork should never be brought to the house. One day he was found eating pork. When asked for an explanation, he said, "This no pork; this fish. I put pork in water. I say, `Pork, pork, you no pork. You fish." And so we have government as the major employer encouraging-

The Minister for Labour and Law (Mr K. M. Byrne): On a point of clarification?

Mr Speaker: On a point of clarification.

Mr Byrne: I am very confused, Sir. [Laughter]

Mr Speaker: Order. Please continue.

Mr Koh: And so we have Government as the major employer encouraging employers, by their own conduct, to deny solemn agreements freely entered into. [Laughter.] Laughter or no laughter, that is what is happening. In the case of the Civil Service the sum involved is not very great, but the number of people involved are a large number of loyal servants of the country. Not only they, but their dependants, and the trade which their expenditure brings. It is a shameful thing that Singapore should dishonour its obligations to its civil servants and pretend generosity in restoring them just enough to pay their own income tax increases.

On Indonesia, Mr Speaker, Sir, the Hon. the Finance Minister's remarks about our trade with Indonesia highlight what has been known by most of us, and that is that the Prime Minister's mission to Indonesia has been a complete failure despite the pink smoke screen emanating from the Ministry of Culture.

An hon. Member: Why pink?

Mr Koh: This failure emphasises the need for a well-trained experienced Singapore Trade Commission permanently established in Djakarta. I therefore welcome the statement of the Hon. the Minister for Finance that a Trade and Cultural Commission will be established in Djakarta. Not only in Djakarta, Mr Speaker, Sir, but also I think in other neighbouring territories, and as far as China, there is an imperative need for us to establish permanent Trade Commissions. One final matter, Mr Speaker, Sir. The newspapers have given the impression that the Government has promised to stand-still taxation for three years. My understanding of the Finance Minister's speech is that that is only in respect of Property Tax.

An hon. Member: You read the wrong newspaper!

Mr Koh: There is no promise at all in respect of income tax or any of the other taxes. Will the Hon. the Minister for Finance clarify?

Now, Sir, the business tax. I would like most emphatically and most forcibly to draw the attention of the Hon, the Minister for Finance to this point, and that is, despite what he might say about the economic conditions of this country, those of us who mix with business people in this country know that many a business is being run at a loss. To put a business tax of $1,000 on a big limited company would not hurt that company. But unfortunately, a tax of $750 on the smaller companies will hurt them tremendously and will cause them great hardship, because most of them are now being run at a toss. I hope the Finance Minister will not laugh that one off.

In conclusion, let me say that this Budget is not a Socialist Budget, nor is it a Budget that adequately meets the realities of today and the economic problems of tomorrow of Singapore.

I shall vote against the motion.

3.06 p.m.

Dato Abdul Hamid Bin Haji Jumat (Geylang Serai): Mr Speaker, Sir, the Minister for Finance has placed before us facts and figures to prove his contention that everything is plain sailing and that there is nothing to worry about. Yet, Sir, by his own calculation, he says that about $30 million will not be spent from this year's Budget. This in effect means, again in the Minister's own words, that `there will be less rural roads and bridges this year, less doctors and specialists, less maintenance work by P.W.D., fewer scholarships, fewer fellowships, fewer police constables, fewer teachers and fewer technicians.' The people of Singapore, Sir, will have everything less in 1960. And yet the Minister for Finance tells us in effect that we have never had it so good. I say, Sir, that we have never had it so bad, what with the increasing number of unemployed and more to feed on less income per head.

Dr Toh Chin Chye: Stop producing!

Dato Abdul Hamid: Mr Speaker, Sir, admittedly there has been an increase in the flow of trade, but this seeming prosperity is not the result of Government's initiative but an act of God.

The price of rubber, Sir, has been good, and the increased output of this commodity in the Federation of Malaya and its export through the port of Singapore has, again as the Minister has pointed out, directly benefited the State. In other words, Sir, we - I mean the people of Singapore - live on the exertions and goodwill of our neighbours. This state of affairs cannot continue, and will not continue for long. This House is no doubt aware that the Federation Government is making every effort to expand the port facilities at Port Swettenham and Sebarang Prai; and then there is even talk of exploiting the harbour at Port Dickson, not to mention the proposed international airport at Kuala Lumpur. Nothing, Sir, can induce the Federation Government to stop proceeding with these schemes. At the same time, they are in the process of establishing a rubber and stock exchange market in the Federal capital.

All this hive of activity in the Federation points to one fact. Very soon, and probably during the life-time of this Government, a large portion of our entrepot trade will cease to exist.

Mr Speaker, Sir, the other support of our economic life, Indonesia, has already shown a tendency to crack. The Minister for Finance, in his Budget speech, and here, Sir, I quote from Hansard, Vol. 14, No. I col. 14, which says:

`Many of the problems arising in our trade with Indonesia are long standing and difficult. While we are a free trade economy with controls reduced to the barest minimum, the Indonesians prefer a policy of "guided economy". This, in effect, means the imposition of controls over all major aspects of trade and production. What we have to do is to meet the legitimate requirements of Indonesia's guided economy in such a way as not to destroy our entrepot trade.'

That was what the Minister for Finance said in his Budget speech. Whilst on the one hand we must give credit to the Prime Minister for his efforts to improve friendly, relations with Indonesia - and I admit he has to some extent been successful - the economic relations between the two countries have not shown any visible signs of improvement. The key to our economic survival is our entrepot trade. This is not the first time that the Government of Singapore has sent missions across the Java sea. During the David Marshall regime, a similar Ministerial mission spent some time in Djakarta followed later by two fact-finding missions from Indonesia. Though there was some slight improvement in relations between the two countries, nothing came out of the whole affair. In fact, Sir, at that time, there was no guided democracy and no guided economy to contend with. As I see it. Sir, the basic fact then was, as it is now, the desire of the Indonesian Government to eliminate what it calls the smuggling trade. Singapore, being a free port, places no insurmountable restrictions on its imports, and hence does not in the nature of things control the commodities that enter its waters nor enquire into the sources of the imported goods. In other words, Sir, not all goods imported into the State of Singapore from Indonesia have gone through the proper controlling authorities at the port of loading. Hence what we call free trade, the Indonesians call smuggling. What the Indonesian Government wanted Singapore to do was to be its policeman. And this situation Singapore was unwilling to accept.

Not only would it create a bad precedent, Sir, but it would also upset the whole structure of our free port status. The position today is still the same, guided economy or not. To the Indonesians, it is not only a matter of national pride but also a matter of economic survival. If they can manage to seal this leak and a few others in Borneo and Sarawak, they feel they can certainly overcome the periodic economic stresses that seem to confront them from time to time. My sympathies, Sir, are with them.

Mr Speaker, Sir, from this, it could be seen that the economic survival of Singapore depends largely on the goodwill and tolerance of our two great neighbours, Indonesia and the Federation of Malaya. How long we can depend on this goodwill, again only the gods can tell. It is therefore the duty of the Government of Singapore, whether it be the P.A.P. Government or any other, to provide alternative sources of livelihood for its people before disaster overtakes them.

The Government's Five-Year Plan is an admirable paper, but what are the basic facts? The industries that are envisaged - flour milling, textile weaving, steel milling and a host of other manufacturing projects - will no doubt provide employment to many. But, Sir, having produced such goods, the job is to sell them. Unless we can produce cheaply and sell competitively I see no hope for an industrialised Singapore, however hard Government may try to induce investors to set up industries. We are not the only country in Asia which is thinking in terms of industrialisation. And we are not in the fortunate position which some of these countries are in, where they have a huge local population who can easily consume the products that their industries produce without bothering about exports. As I see it, Sir, Government's industrialisation policy, among other things, faces two uncompromising barriers. The first is the lack of a ready and large enough home market to act as a cushion and to make industry worthwhile; and, secondly, the tariff barriers that have been and will ultimately be put up by other producing countries, as has already happened in Indonesia and only a few days ago in the Federation of Malaya. Both these two countries which are our logical buyers and consumers have their own Five-Year Plans and industrial policies; hence we cannot place any confidence in these markets. On the other hand, Sir, we cannot hope to follow the lead taken by Hongkong, where primarily because of its very, very cheap labour it has been able to capture some of the world's markets. It is obvious, therefore, that by the time our industries go into full gear most of the possible markets now available to us will have already been taken up by the local industries in the territories concerned, or will have been checked one way or another by tariff barriers. Sir, I do not dare to predict that Government's industrial plan will end in failure. But I do say this - that so long as our economy is tied in the way it is to the goodwill of our neighbours, the way ahead is indeed bleak and dark. I therefore hope, Sir, that while implementing its industrial plan, Government would at the same time make greater efforts to convince our neighbours, particularly the Federation of Malaya, that they need us as much as we need them. The only way to do this is to put the general political atmosphere in its proper perspective. Our Prime Minister here, Sir, proclaims that his Government is a Leftist Socialist Government. Across the Straits of Johore, we find the Tunku vociferously repeating that his is a Rightist people's government. Whilst, on the one hand, the people of both these territories tend to regard themselves as Malayans, the Government of both territories are poles apart. Somewhere, Sir, there must be a link, a link that would strike the right note and bring about a common understanding of each other's problems. For only then can there be mutual trust and mutual respect, the foundations upon which to build a prosperous Singapore.

Sir, while we are on the subject of our relations with the Federation, I am somewhat perturbed to note that it is the intention of the Government eventually to have a trade representative in Kuala Lumpur. I wonder whether this is a wise move. If the object is to have closer relations with the Federation in the economic field, then I think it is the wrong way to go about it. Kuala Lumpur is only 200 miles away, a matter of only an hour's flight from Singapore. Nothing would jeopardize the relations between these two countries more than to have a representative in Kuala Lumpur, a fact which would only tend to emphasise the distinction rather than the common interests of both. Sir, I would advise Government to think again on this matter.

3.21 p.m.

Mr Thio Chan Bee (Tanglin): Mr Speaker, Sir, last year we humbly and earnestly warned the Government that their policy of the big knife and the big axe-

Mr Byrne: The broad axe.

Mr Thio Chan Bee: - and the broad axe was being carried out too far; that the drastic cut in the variable allowances of Government servants was a hasty and premature step and might prove unnecessary because the threatened deficit might turn out to be a surplus. As usual, Sir, the arguments of the Opposition were met by a barrage of ridicule sneers and laughter. We also warned the Government that the drastic reduction in the spending power of thousands of Government employees to the tune of millions of dollars would have a chain reaction and that there would be repercussions on the economy of the country. Sir, after 14 years, the truth is out. Our forecasts were correct. The year 1959 ended not with a deficit but with a surplus of $9 million, according to the speech of the Yang di-Pertuan Negara, and the year 1960 is likely to end with a deficit of $37 million.

Mr Byrne: A surplus!

Mr Thio Chan Bee: With a surplus of $37 million. Ordinarily, Sir, surpluses should be welcomed. But these surpluses as a result of drastic under-expenditure and drastic pay cuts have had very adverse effects on the country's economy. The result is that there has been a general tightening up of the people's purse strings. People who have money are reluctant to spend, and those who would like to spend have not got the money or have not got jobs' whereby they can earn money.

Sir, the Finance Minister has mentioned two aspects which are considered remarkable. In the light of what I have said, Sir, the explanation is quite simple. May I refer to Hansard, 29th November, 1960, Vol. 14, No. 1, col. 18 which reads:

`All in all, the indications are that there was a solid and substantial revival of the economy this year. What is remarkable in this economic revival is that the expansion in trade and production did not bring about any inflationary process. The currency in circulation for the Malayan dollar area remained practically stationary, being $1,162 million in January and $1,166 million in September.'.

Well, Sir, we know now why. Because there was not much money in circulation owing to the drastic cut in the millions that could have been spent and that could have started a chain reaction.

`Prices of consumer goods did not rise. On the contrary, -'

The Prime Minister: On a point of information, Sir, -

Mr Speaker: Order. If the Member will not give way, the point of information cannot be raised.

Mr Thio Chan Bee: Sir, the Hon. the Prime Minister will have his chance after my speech.

The Prime Minister: I will have forgotten what he said.

Mr Thio Chan Bee: `Prices of consumer goods did not rise. On the contrary, the official index of retail prices showed a decline of 5.4 points from 317.2 in January to 311.8 in September.'.

Then, Sir, further down the column the Finance Minister said:

`Taking into account all items of consumer goods in the course of the year, there has been a significant fall in prices. There are very few instances in contemporary economic history where economic expansion and falling prices occurred simultaneously.'.

Naturally, Sir, because in most countries there was not this-

An hon. Member: Pay cut!

Mr Thio Chan Bee: - counter action on the part of the Government to bring about not more prosperity, but a decline in the prosperity of the country. The fact that the Indonesian trade declined was another sign. I shall later on deal with what I consider to be the real reason for the surpluses. Sir, when the Government imposed that pay cut unilaterally-

Mr Byrne: You must have suffered quite a lot!

Mr Thio Chan Bee: -it was assumed that there would be a huge deficit, and therefore the Government had to take drastic measures. The Minister for Finance, in fact, said that unless he took such measures, the boat might sink.

Dr Goh Keng Swee rose -

Mr Speaker: On a point of order?

Dr Goh Keng Swee: Yes. Sir, I think I am right in assuming that the hon. Member was in receipt of a variable allowance which had been reduced. Is it in order for a Member to speak on a subject in which he has an interest financially?

Mr Speaker: I think the Minister for Finance with that sparkle in his eyes is probably raising this point of order with his tongue in his cheek, because he does know that this is a matter of general policy, and any Member can speak on any matter of general policy, whether he is personally interested or not. Mr Thio.

Mr Thio Chan Bee: I think I did mention it, but if I did not, I will now say that I did mention to a few Assemblymen on the Government side, that if ever the Government did make restitution and I stood to benefit by the restitution, all that was due to me would be given to the unemployed.

An hon. Member: Works Brigade!

The Prime Minister: Sir, am I

Mr Speaker: Order. Is it a point of order?

The Prime Minister: No, Sir.

Mr Speaker: Well, will the Prime Minister take his seat?

The Prime Minister resumed his seat.

Mr Speaker: If the Member will not give way, no other Member can stand.

Mr Thio Chan Bee: I am glad the Government has begun to show a change of heart by wanting the Staff Side to reopen negotiations, but, Sir, there is an important principle involved. If the cut in the variable allowances was made unilaterally, on the basis of a wrong premise that there would be a huge deficit, then whatever the Government gained thereby should belong to the employees. If there should be negotiations for a partial restoration of that cut, then it could be made hereafter but it could not have retrospective effect. What was cut off was cut off on the assumption that the Government was facing a huge deficit. That deficit did not materialise because, as a result of under-expenditure, there was no deficit. Therefore, Sir, part of that surplus belonged to the Government employees. Sir, it is time for the Government to show by their actions that they are a model employer. If an employer, on a wrong premise, retained part of his employee's pay and in due course he finds out that he had made a mistake, then I am sure, Sir, that the Government would demand that that employer should return all the money that had been wrongly retained.

An hon. Member: Did we make a mistake?

Mr Thio Chan Bee: Sir, this is a case of restitution and not restoration. However, it is possible that in the process of negotiations, the Government might be able to persuade the Staff Side, out of loyalty to the State or out of sympathy for the unemployed, to make a contribution to an unemployment fund; but I am sure that morally the civil servants are entitled to that sum of money which has been retained on wrong premises.

Sir, in the first quarter of his Budget Statement, the Minister for Finance launched out on what he described as "a dissertation on basic principles". There is much in that statement of principles with which we agree, but now and then he varied cleverly, interposing a sparkling claim which might impress foreign readers or passing tourists but which is startling and in a way surprising to local people with local knowledge. Such claims cannot be allowed to pass unchallenged. In column 10 of the Budget Statement, at paragraph 2, the Minister for Finance said:

`This is the ultimate test. For a government is judged not so much by its expressions of good intentions but by its concrete achievements in the way of economic prosperity and public welfare.'

Up to this point, we agree, Sir. Then he went on to say:

`By this standard the people of Singapore have done well.'

"Have done well", Sir? Ask the people who put them into power - the hawkers, the trisha-pullers, the taxi-drivers: has Singapore done well? They will say that the people of Singapore have done badly - very badly! If the Government had said that some of the people of Singapore have done well, we could have accepted that. The people would have accepted that without any protest. But to say that the people of Singapore have done well throughout last year, Sir - that is like asking people to believe what they have not experienced.

Sir, people who have eyes to see and ears to hear can see and hear for themselves what has happened. The people who have benefited are a small section of the community - the merchants who have trading interests with the Federation. The merchants and companies who own tin mines and rubber estates or who own shares have benefited. The increases have only been increases through bank transfers, but the profits have not gone quickly to the employees and then on to the consumers. Therefore, there is not much money - more than what is usually circulated - to circulate. There is less spending power. With the population increasing, naturally there is less money per head to spend. Sir, those who have made money and who have really prospered have most probably salted it away somewhere - [Interruption] maybe to the Federation, Borneo or Sarawak - and they will not invest in Singapore until they see more signs to indicate that they can have confidence in the Government. One way in which the Government can show that they are able to keep their promises is for them as employers, -

Dr Goh Keng Swee: Who is talking?

Mr Thio Chan Bee: -to do what they expect other employers to do.

Mr Byrne: What is that?

Mr Speaker: Order. I think probably the Government Benchers are taking this debate a little too frivolously. I would suggest that there should be less interruptions from them.

Mr Thio Chan Bee: Mr Speaker, Sir, we have noticed one regrettable thing on the Government side, and that is they seem to think they have a monopoly on human wisdom in Singapore.

The Prime Minister: We have not got a monopoly on stupidity!

Mr Thio Chan Bee: Sir, when we make mistakes, it is only right that we should own up to them, because we can learn from them. And although the Government have not said so, there are now indications that they want to rectify some of their errors. The Prime Minister himself has expressed that sentiment in the past.

Sir, the Government has inherited a great deal of prosperity from the past. They are going to benefit to the tune of $30 million through the hastened repayment of the loan to the Federation. We have no objection, Sir.

The Prime Minister: How can you?

Mr Speaker: Order.

Mr Thio Chan Bee: Sir, the Minister for Finance is now trying to win back the confidence of local investors and foreign capital. We wish him success, Sir. But can the Government really succeed if with one hand they promise to give one thing, and with the other hand they cause the people's confidence to be shakened? To give one instance, Sir, there is in the trade unions, as we know, a struggle for control. The Government side know better than we, Sir, what forces are involved. But the general workers in Singapore are not interested in the political struggle in the trade unions. They are only interested in better wages and better living conditions, and if they could share in the prosperity of their employers, they would be glad to do so. They are not interested in the political struggle, except those who are interested in political power. Sir, if the trade unions in Singapore could be really set free, like the trade unions in the Federation, that would be a step towards industrial peace and stability.

Sir, the Government have declared that they are partial to the workers. If they want stability, then they will have to be partial, fair or just to three sides: to the workers, to the employers and to the general public. Very often, the general public are left out from that picture. How can people believe that politics do not play an important part in trade unions and that politics do not have a final say in business if the Government still have political advisers? With political advisers advising Government Ministers and playing a very prominent part in trade unions, it must naturally be assumed that should there be any disagreement, then there is no chance for the business people to have justice on their side. So if the Government want to indicate that they are sincere in wanting to bring over foreign capital and in getting local people interested in investing money in local enterprises, then one way would be to abolish the posts of Political Secretaries.

Sir, I notice that the Minister for Finance referred to Japan and West Germany as countries whose economic revival has been nothing short of miraculous. Sir, these countries are not controlled by extreme Left-wing groups. I am glad, Sir, that the Government say that free enterprise can play a great part in bringing prosperity to the country. We believe, Sir, that any industrial peace based on the ideology of a class war will never work. It is time that we think about the basis on which we want to have industrial peace and stability in this country. We should not set workers against employers nor employers against workers. We are against exploitation of the workers by employers. But the time has come when we cannot have political bosses also exploiting the workers for the sake of political power.

Sir, the question of unemployment casts a shadow over the future of Singapore. The Government solution is through industrialisation at a terrific cost. We have been told that on an investment totalling $100 million there will be opportunities for employment for 2,500 people. At that rate, Sir, Government will need $800 million to provide employment for 20,000 workers, which may be the annual intake of labour into the labour market each year. Sir, I do not think we have the money for that.

Dr Goh Keng Swee: On a point of clarification.

Mr Speaker: If the Member will give way.

Mr Thio Chan Bee: Sir, he will have his chance later on. [Interruption].

Mr Speaker: Order.

Mr Thio Chan Bee: Sir, local businessmen say that with free enterprise, they can do it on less money. On $15,000 or $10,000 - and not on $40,000 - they can provide work for one employee. Sir, industrialisation will succeed provided there is a market for the goods produced, and the market cannot be limited to Singapore alone. We have seen how, after the Government had made a move to protect the local manufacturers of soap, another move was made in the Federation which nullified the result of the Singapore move.

Sir, it looks as if in spite of the Government's good intentions we are not sure of the success of the plans outlined by them. We believe that we must basically remove the fear and distrust which the Federation has towards us at this time, and the Singapore Government can play a great part in removing that fear and distrust.

3.44 p.m.

Mr Ong Eng Guan (Hong Lim): Mr Speaker, Sir, the taxation policy of this Government has been calculated to tax the people of Singapore for the benefit of foreign business. Since June 1959, this Government has introduced 12 new taxes. In the 1961 Budget these 12 new taxes in my estimation will yield approximately $45 million. Most of these millions will be squeezed, cent by cent, dollar by dollar, from the poor, from the wage earners, from the shopkeepers, from the taxi-drivers and the hawkers, from the working population, from the small private companies run by local merchants. An estimated $100,000 out of the $45 million is all the contribution this Government has asked from the big European firms which control our economy and make most of the profits. These European firms in my opinion make at least half of the profits of Singapore, and are asked by this "Socialist" Government to contribute less than 1 per cent of the $45 million; to be exact .002 per cent.

Here are the facts. The 12 new taxes introduced by this so-called socialist Government and their respective revenue in 1961 are estimated as follows: Million $ 1 Tax on local made 8.0 cigarettes 2 Tax on petrol 6.0 On these two taxes, when they were introduced in September 1959, it was expected that they would yield about $14 million. The revenue in 1961 could be less because of the fall in consumption due to increase in prices of the two commodities. 3 Pay cuts of civil 12.0 servants 4 Tax on lotteries 3.5 5 Decrease in the rates of 4.0 personal allowance on income tax and increase in the maximum rate of tax on personal income 6 Business 3.5 registration tax 7 Stamp duty on import and 0.5 export declarations 8 Increased assessment on 0.4 rubber estates 9 Increased rates on private 0.1 lotteries 10 Professions tax 1.0 11 Air travel tax 1.0 12 Property tax 1.0 (estimated additional revenue from, increased assessment in rural areas) in my estimation is ----- Total $45.5 -----

Mr Speaker, Sir, what are the incidences of these new taxes? Who are the people affected? Are these taxes just and equitable? Are they based on the principle of "ability to pay", a principle recognised and adopted even by openly confessed Right-wing capitalist Governments? And we ask ourselves: is this a Government working for the interests of the people? Sir, what is the real nature of these new taxes? I shall describe them briefly.

First, tax on local made cigarettes. This tax was introduced on 17th September, 1959, after months of disagreement between the Minister for Finance and myself. This tax has two effects. It is a tax on the poor. The worker and the wage earner are those who smoke local-made cigarettes. This tax also suppressed local cigarette manufacturers for the benefit of the big American and British cigarette monopolies. A worker or a wage earner who smokes, say, 20 cigarettes a day will have to pay an additional tax of $6 a month. I have correspondence between the Minister for Finance and myself on this issue.

Second, what is the impact and incidence of the petrol tax? Out of an estimated $6 million additional revenue a year from petrol tax, I estimated $2 million will come from taxi drivers, pirate taxis, lorry operators and fishermen; $2 million from wage earners, teachers and salesmen; $1½ million from shopkeepers, and less than $1½ million from those who can afford cars worth more than $12,000 each. The petrol tax is primarily a tax on taxi drivers, the white collar workers and the small shopkeepers. This tax will be an intolerable burden on taxi drivers. The plans we have finalised with the Taxi Drivers' Union to give coupons to the taxi drivers was vetoed. Mr Speaker, Sir, at the end of the sitting, I wish to put on record in this House a copy of the plan for a Petrol Coupon Scheme for taxi drivers.

Third, we come to the lotteries tax. What is the incidence of the lotteries tax? How does it operate? The lotteries tax is a tax on the underprivileged sections of the population who hoped to change their fortunes, and have been encouraged by this so-called socialist Government to do so, especially the hawkers, taxi drivers, wage earners and all those in debt. Out of every dollar "invested" in lotteries, 30 per cent goes to the Government as tax. 40 per cent goes to the Singapore Turf Club and the horse owners, and 30 per cent goes back to the purchasers of lotteries as prizes. The lotteries tax introduced by this Government is to raise revenue from the poor and to benefit the European and Compradore controlled Singapore Turf Club and the millionaire horse owners, unlike the Federation Social Welfare lottery which is a tax on the poor for the benefit of the poor. Ours is not so. The peculiar characteristic of the lotteries tax is that, with increasing unemployment and bad business conditions, an increasing number of people who hardly earn enough to eat, the collection from the lotteries tax will increase. The Minister for Finance sounded very happy when he said this in his Budget Speech (col. 29):

`As against an estimate of $4 million on taxes on totalisators and sweepstakes [in 1960], the actual collections for the first ten months amounted to $4.7 million and, it is anticipated that the original estimate will be exceeded by $1.2 million by the end of the year.'

On the other hand, Mr Speaker, Sir, the Minister for Finance said:

`Stamp duty was estimated at $3.8 million but there is likely to be a shortfall of $½ million.'

Mr Speaker, Sir, this is a very great example of business conditions and the state of the economy of our country. This decrease in collections from stamp duty means that the volume of business and property transactions has decreased. More revenue from the lotteries tax than expected, less revenue from stamp duty than expected - nothing is a better indication that times are bad. But, Mr Speaker, Sir, to Mr Ah Q, however, this is "prosperity".

Fourth, we come to the pay cuts. Ex-civil servants hate civil servants. Ex-professional men dislike professional men. Is it not true that the original plan hatched by ex-civil servants to tax former colleagues was even more severe? Not many days after the issue of the Hong Lim resolutions, the Prime Minister despatched his Political Secretary, Mr Jek Yuen Thong, to Cairnhill where civil servants were told that their pay cuts were the result of that scapegoat, Ong Eng Guan. I challenge the Minister for Finance, Mr Speaker, Sir, to tell the truth about the pay cuts and tell them what was his original plan. Was it not a fact that were it not for the Member for Hong Lim, much more pay would be cut, particularly those in the lower income groups?

Dr Goh Keng Swee: Rubbish!

Mr Speaker: Order.

Mr Ong Eng Guan: Produce Cabinet documents-

Dr Goh Keng Swee: Liar!

Mr Speaker: Order! I think the Minister for Finance is guilty of an unparliamentary word. He ought to withdraw.

Dr Goh Keng Swee: I withdraw it, Sir.

Mr Ong Eng Guan: Mr Speaker, Sir, the Minister for Finance filed his original proposals which, after some weeks of "ding-dong", were reduced. Only 18 months in office, this Government, which once the people of Singapore had returned 43 out of 51 seats, has within such a short space of time lost all popular support. The worker and the farmer, the wage-earner and the intelligentsia, the shopkeeper and the hawker, have lost their confidence. Many of the 50-odd P.A.P. branches have now closed down and most of them have been deserted. For the benefit of the Member for Tanjong Pagar who does not know, what is going on in his Branch, they are playing cards most of the time.

Mr Speaker: Order. This Assembly Chamber is not aware of a Member for Tanjong Pagar. If the hon. Member means the Prime Minister, he ought to say "the Prime Minister".

Mr Ong Eng Guan: Mr Speaker, Sir, I do not wish to repeat saying "the Tanjong Pagar Branch" twice; therefore, 71 mentioned "the Member for Tanjong Pagar". I withdraw and substitute "the Prime Minister".

The Government is now turning to the civil servants for a last-ditch support, by promise of partial restoration of the pay cuts, to be carried through protracted negotiations. I remember in 1959 the Minister for Finance transferred Mr Rajendra, who works in the Telecommunications Department, from Hill Street to Jurong without my knowledge, when I was Minister in charge of the Telecommunications Department and was responsible for any breakdown in the service. Mr Speaker, Sir, I never did that to all those members of the Staff Unions in City Council times.

The present political strategy of the Government is this. Hang a carrot in front of the civil servants, but let them bite it some time later, depending on the period of negotiations, which will be decided by the interplay of political forces. The Government will engage more expatriates; it is considered local engineers and architects cannot do the job. The Government will seek more funds from the United Kingdom and the United States - build and build, spend and spend, no matter whether such construction or such expenditure is to the interests of the people or not, for it can be left to posterity to pay the foreign debts. By 1962, anti-colonial slogans would be slowly but surely reintroduced. Eventually it hopes to spring a snap election before 1964, perhaps in 1963 if conditions are favourable. This is considered by the political strategists to be the only chance left to be returned a second time, and the civil servants would be given partial restoration of their pay cuts to make them play a more decisive role to save them. Mr Speaker, Sir, the legislation for snap elections was passed last year. The Press is now rigidly controlled. Special articles under pseudonyms supplied by Government regularly appear in the Chinese papers whenever there are hot political issues. The radio is fast becoming a Party radio; television will also become a Party television. Expensive pamphlets printed on gloss paper from public funds with high-sounding titles like "The Socialist Solution", "An Analysis of Current Political Forces in Singapore", and "Towards Socialism", Vol. 1, a Ministry of Culture Publication; 30,000 to 40,000 copies had been scattered and nobody wants to read them. It begins with the Prime Minister's speech made in this Assembly. These pamphlets with high-sounding titles but containing nothing concerning socialism, more will be printed and thrown around. And despite this rigid control of the Press, and the threats of laws like the Criminal Law (Temporary Provisions) Ordinance, in case some people who do not toe the Lee Kuan Yew line still start distributing pamphlets like the Member for Hong Lim, the Member for Aljunied and the Member for Punggol once used to do, there would be the latest amendment to the Undesirable Publications Ordinance on the 17th November, 1960, which would enable the Government to raid premises and impound such pamphlets. I knew on that day. Mr Speaker, Sir, but would all these suppressive measures work? Would all these gadgets ensure a return to power in 1964? The former Government also tried many gadgets. For instance, George Thomson went to New Zealand to study compulsory voting. But it did not succeed. Any government which works sincerely and honestly without resorting to electioneering and political gadgets will be returned.

Mr Speaker, Sir, the taxes I have described just now, the cigarettes tax, petrol tax, lotteries tax and the pay cuts which were introduced in 1959 and 1960, would continue to be collected in 1961. We now come to the other eight new taxes.

First of all, the income tax. Among the eight new taxes, the decrease in the rates for personal allowances is the most important. $4 million is expected from this new tax. This is a tax aimed mainly at the lower income groups, particularly the wage-earners and the shopkeepers. Due to the reduction of personal allowances, the middle class will also be slightly affected by having to pay higher rates. The increase of the maximum rate to 55 per cent on incomes above $100,000 a year is a propaganda eye-wash, to give people an impression that the 1961 change in the tax structure is directed not only towards the lower income groups. This 5 per cent increase on the over $100,000 income group attracts little revenue.

The Prime Minister: On a point of information.

Mr Ong Eng Guan resumed his seat.

Mr Speaker: Mr Prime Minister.

The Prime Minister: Is the Member for Hong Lim having difficulty in reading the speech because of the lighting?

Mr Speaker: That matter has been raised as a point of information. I think the Prime Minister must know that no Member is supposed to read a speech in this House. The Prime Minister has not risen on a point of order.

Mr Ong Eng Guan: Mr Speaker, Sir, I have spent nearly a week computing these figures, and I have no George Thomson drawing public pay doing computation work and writing speeches for me, as he is doing for the Prime Minister. This 5 per cent increase on those with more than $100,000 attracts little revenue. There are only 118 people in this income group as contained in the Income Tax 1958 Annual Report. The Federation is again as usual being used as a convenient excuse. For several years there have been differences between our respective tax laws, the tax base and the tax rates in the two territories. Very soon there are to be two different currencies, whether we like it or not. People are tired and do not believe in the Federation scapegoat for all the acts of commission and omission done by this Government. The Federation had years ago repealed the Business Registration Tax due to protests from the shopkeepers. Why should Singapore now introduce this tax? Why does Singapore want to introduce a tax rejected by the Federation? It is common knowledge that the shopkeepers tax, which is the real word for the Business Registration Tax, was the main form of tax used mainly by colonial countries like Sarawak and in the Federation before Merdeka to benefit the interests of the big foreign companies.

Mr Speaker, Sir, by reducing the personal allowances the Government also hopes to draw an estimated 20,000 people into the Income Tax net. It expects to collect $750,000 from these 20,000 new taxpayers, mostly wage-earners. The Government estimates it will collect on an average of about $36 from each new taxpayer. Did the Minister for Finance know the cost of collection for each taxpayer?

Mr Ong Eng Guan resumed his seat.

Mr Speaker: Order. The Member must continue with his speech.

Mr Ong Eng Guan: Mr Speaker, Sir, the Minister just now was trying to hint that I do not know how to calculate the tax. I have worked out the cost of collection from the 1958 Income Tax Report. It works out at about $70 per collection. $70. Please take it down.

Mr Speaker: Order. If the Member for Hong Lim does not obey the directions of the Chair and keep order himself, the Speaker, or whoever is in the Chair, has means of stopping him from speaking.

Mr Ong Eng Guan: Mr Speaker, Sir, assume that it takes less time to assess these wage-earners who, after all, have nothing much to declare, and compute, let us say, not $70 per collection, but say $50. Mr Speaker, Sir, we have a Minister for Finance who will spend $50 to collect $30 each from 20,000 wage-earners.

I have also computed, Sir, - it is a pity the Government has this year given us so little time. Last year they gave the S.P.A. two weeks. This time they have given us only seven clear days, otherwise-

Mr Speaker: Order. I think the hon. Member for Hong Lim knows the Standing Orders, which are the Standing Orders made by this Assembly. The Standing Orders only allow for seven clear days. Please continue.

Mr Ong Eng Guan: Mr Speaker, Sir, at the end of the sitting I will table before this House a table showing the percentage increase of tax among the various income groups*. If one earns $100,000 a year, the increase is 1½ per cent. These are the big-shots, (a hundred of them) and the increase is negligible. But if one earns $1,000 a month, the increase is 25 per cent; $750 a month, it is 39 per cent; $500 a month, it is 110 per cent; $458 a month, it is 200 per cent; $425 a month, it is 1,000 per cent.

• Copy placed in the Assembly Library.

The Prime Minister: On a point of information.

Mr Speaker: If the Member will give way.

Mr Ong Eng Guan resumed his seat.

The Prime Minister: What is 1,000 per cent worth in dollars and cents, please?

Mr Ong Eng Guan: Mr Speaker, Sir, economists and those responsible for deciding fiscal policies do not compute policy in terms of quantum, but in terms of-

Mr Byrne: Propaganda!

Mr Ong Eng Guan: - changes in the tax structure to see whether such changes are progressive changes, proportionate changes or digressive changes. The change introduced in the 1961 Budget is a digressive change.

The Minister for Culture (Mr S. Rajaratnam): Digressive! Progressive, you mean!

The Prime Minister: He is digressive!

Mr Ong Eng Guan: Mr Speaker, Sir, one does not study these words in the law books.

The Prime Minister: On a point of information.

Mr Ong Eng Guan resumed his seat.

The Prime Minister: I asked for the figure on which the 1,000 per cent is based. That is very simple. If he did the computation, surely he has the figure. If he has not, perhaps he would like a brief adjournment to get it.

Mr Ong Eng Guan: Mr Speaker, Sir, a full list* of the effect of the changes in the tax will be put on the Table towards the end of the sitting.

• Copy placed in the Assembly Library.

Mr Speaker: Order. If a Member in this Assembly wishes to produce a document which he wishes Members to see, I think the proper course is for him to place a copy in the Library.

Mr Ong Eng Guan: Mr Speaker, Sir, the most unfortunate victims are those who earn between $320 and $417 a month. The increase is infinity.

Mr Speaker, Sir, we now come to the Business Registration Tax. The Business Registration Tax is actually the shopkeepers' tax. It is proposed to raise $2½ million in 1961 from this tax. If all shops and businesses are taxed equitably, then there is nothing so objectionable about the Business Registration Tax. But this is not the case. Public limited companies, owned mostly by European enterprises possessing on the average a capital of $20 to $30 million each and earning on the average millions of dollars of profits a year, are only asked to pay an annual tax of $1,000. For instance, the Hongkong and Shanghai Bank, with a capital of $120 million and earning a profit of $14 million a year, pays $1,000. Private companies, owned mostly by local businessmen, some of which have only a few thousand dollars capital, pay $750 a year. Mr Speaker, Sir, I do understand that not all the profits of foreign companies are earned in Singapore. But neither are the private companies. Shopkeepers are asked to pay $50 or $100 for sole ownership and partnership respectively. The shop could be a small coffeeshop.

Inche Baharuddin Bin Mohamed Ariff (Anson): On a point of order, Mr Speaker.

Mr Speaker: Point of order.

Inche Baharuddin Bin Mohamed Ariff: Mr Speaker, Sir, since we understand that you have ruled before that no Member can read from a text, it seems that the Member for Hong Lim throughout his speech has been reading from his text. I wonder if that sort of thing could be allowed by the Speaker in this House.

Mr Speaker: Order. I think hon. Members have perhaps noticed that the Chair is a bit lenient in these matters, especially if there are very important pronouncements to be made by Ministers as well as by Opposition Members. But I have noticed that possibly the Member for Hong Lim has been referring to his notes a bit too frequently. Perhaps he will endeavour not to do so.

Mr Ong Eng Guan: Mr Speaker, Sir, I am doing nothing more than just debating the Minister for Finance's Budget speech which was also printed and read by him word for word.

You see, in debates on economics -

Mr Speaker: Order. I do not know whether the hon. Member for Hong Lim is debating the Chair's ruling. The Chair's ruling is very simple, that a Member should not refer to his notes too frequently unless, of course, there are volumes of figures that he wishes to quote from. Then he can read those volumes of figures. Let us leave it at that.

Mr Ong Eng Guan: Shopkeepers are asked to pay $50 or $100 for sole ownerships and partnerships respectively. The shop could be a small coffee shop with a few hundred dollars capital. In this manner, the Business Registration Tax is an unjust tax, throwing a heavy burden on the small and medium sized shopkeepers. We propose that the $2 million expected from the business tax should not be borne mainly by the shopkeepers, but should be spread out proportionately among all businesses, big or small, European or local, according to capital. The Government must not discriminate against small shopkeepers and small private companies in favour of the big European firms. Those shops and private companies with a capital of under $10,000 or so should be exempted from this tax. Otherwise small shops and private companies with less than $10,000 capital might be compelled to close down. The shopkeepers' tax is one form of tax favoured by colonial economists.

Dr Goh Keng Swee rose -

Mr Speaker: On a point of information?

Dr Goh Keng Swee: On a point of elucidation.

Mr Ong Eng Guan resumed his seat.

Dr Goh Keng Swee: The Member for Hong Lim says that he fears that there may be an extensive closing down of shops as a result of this tax. Is he aware of the rates of the tax? Does he really expect us to believe that a tax of $4 a month will result in the closing down of businesses?

Mr Ong Eng Guan: Mr Speaker, Sir, the Minister's Income Tax Department will supply him with the number of private companies and small shops which are likely to close down because of this Business Registration Tax.

Mr Speaker, Sir, I cannot understand this onslaught on the shopkeepers, as I cannot understand the exploitation of the poor by this self-proclaimed socialist Government by the introduction of the cigarettes, petrol and lotteries taxes. Shopkeepers are not capitalists. The Minister for Finance said in his speech at column 44:

`The reason for introducing this form of taxation is apparent. A large majority of small shopkeepers do not contribute whatsoever to the Inland Revenue.'

Mr Speaker, Sir, these small shopkeepers were not paying income tax because many of them do not earn one-tenth of the income of our Parliamentary Secretaries. That is, they do not even make $2,000 a year. The shopkeepers are, in general, people who have started from the humblest origins, through self denial and hard work, and sometimes with the help of friends and relatives they manage to open a shop either alone or in partnership. They are now singled out for criticism by the Minister for Finance for their abstemious habits. Were it not for the fact that generations of them had sweated and toiled and exercised self-denial and were of abstemious habits, would there have been built the public institutions and the schools and the Singapore that we see today?

Among the other new taxes, the tax on private lotteries yields a meagre $100,000. Why look into the haystack for such a small needle? A few free overseas trips would cost that amount. The only conclusion I can draw is that certain small organisations, which occasionally sell private lotteries for charities or to boost up their funds, are hurting the sales of the lotteries of the Singapore Turf Club. Lumped together with this tax on private lotteries is the tax on jackpots. And, Mr Speaker, Sir, imagine how much tax is to be raised from jackpots. $50,000! Just sufficient to beautify Sri Temasek with marble. The purpose of this jackpot tax is to conceal the motive behind the private lotteries tax by the familiar technique of lumping together.

Another new tax proposal is to raise the assessment of properties in the rural areas. Why not assess those beautiful Shell properties and bungalows in Pulau Bukom which should yield at least a million dollars a year? The poor Malays in the Southern Islands have to pay assessment on their shabby attap huts. The Shell Company in Pulau Bukom do not have to observe building and planning by-laws.

Mr S. Ramaswamy (Bukit Merah) rose -

Mr Speaker: On a point of order?

Mr Ramaswamy: Yes. The Member still seems to be reading from his text.

Mr Speaker: I have noticed that and I have already drawn the attention of the Member to the fact that he is referring to his notes very frequently. In spite of that, he seems to be referring a little more to his notes. Perhaps he could refrain from referring so frequently to his notes.

Mr Ong Eng Guan: Thank you, Mr Speaker. The Shell properties in Pulau Bukom are worth about $125 million. They do not pay even one cent of assessment. Does the Prime Minister know this, despite the fact that this matter is under his charge? That is the reason why certain departments have had to be taken over from his former Minister for National Development. Again, Mr Speaker, Sir, why not open negotiations with the British on assessment of houses on military properties? This will probably yield millions of dollars annually. After all, the British Military and the Shell Company are benefiting from services provided by the City Council in the form of health measures, roads, public utilities and so on. We are only asking them to pay their fair share, and nothing more. The proposed increase in assessment on rural properties will affect mainly the farmers and the rural shopkeepers. There have been little significant improvements in the rural areas. Rural poverty, farmers heavily in debt, and squalid living conditions. The farmers are now suffering, due to the reduction of prices of pigs, eggs, chickens and vegetables. The general poverty of the farmers has also affected the rural shopkeepers. The least the Government can do is to leave them alone. Has the Government really the heart to increase their taxes? The Minister for Finance described the jackpot as a one-armed bandit. It is not as oppressive as the two-armed bandit, who searches anxiously with hungry looking eyes for the poor as his prey.

Next, it is expected to raise $500,000 from imposing a stamp duty on import and export declarations. I agree with the Minister for Finance that this will not impose a burden on the importers and exporters. However, is it necessary in the interests of Singapore's trade? The charge is small but it has a nuisance value. This stamp duty will hinder the smooth and quick flow of trade. There will be more queues. The Department has to stamp 3,000 forms each day.

Mr Speaker, Sir, is it necessary to introduce all these taxes to raise $45 million? I am sure there are many more soak-the-poor gimmicks in the Minister for Finance's bag. In my opinion, all these are not necessary. The Government can prune down its wasteful and extravagant expenditure, and the Ministers themselves should set an example like leaders in other countries do.

I hope the Minister for Finance remembers what he said on 22nd March. 1959. This is a very useful book at times [Indicating]. His speech is contained in page 26 of Part I of the P.A.P.'s "The Tasks Ahead".

Mr Rajaratnam: You still read that?

Mr Ong Eng Guan: Why not? When it is to find out the consistencies or the inconsistencies of the present Ministers. On page 26 is a speech delivered by Dr Goh Keng Swee at a mass rally at Dhoby Ghaut on 22nd March, 1959. He said:

`By ruthless pruning of Government expenditure, we may be able to add $20 million annually to the Development Board.'.

Of course, the excuse now is to wait for the Commission of Inquiry on Government expenditure to make its recommendations, and our Minister for Finance will wait till 1965. A more simple method to prove one's consistency is by adding $20 million or $25 million to the Expenditure Estimates, and in the following year prune it down by the same amount.

Mr Speaker, Sir, let us assume for one moment that the Minister for Finance has no experience in Government affairs, that it is impossible to prune Government expenditure by $20 million, that it is even necessary to increase expenditure, and that $45 million should be raised from taxes.

In framing a tax policy, considerations of yield, justice, administrative costs, and economic effects must be taken into account. No tax law can be enforced for any reasonable length of time if it is against the wishes of the people. The repeal of the shopkeepers' tax in the Federation is a clear example. The people must believe that the tax is just and that they are asked to contribute on a just basis to the national effort, and the running of the State. It is possible to convince the people for a short period of time that the burden from the imposition of new taxes is equitable. But this propaganda cannot last for any length of time. When the petrol tax was introduced, the propaganda line was that car owners are well-to-do, so they pay petrol tax. When the cigarettes tax was introduced, it was like this: cigarettes are a luxury; beer drinking is not. That is why there is no tax on beer. The propaganda on the lotteries tax was this: this tax is to deal with chap-ji-kee and four digits. However, the people are waking up, when they find that their standards of living are going down.

Mr Speaker, Sir, the basic taxation policy adopted even in capitalist economies is the principle of ability to pay. According to this principle, those who have the greatest wealth or income pay most of the tax regardless of any benefits they derive. The ability-to-pay-principle also helps to equalise the distribution of income and wealth, and leads to progressive taxation.

Most of the new measures introduced by this Government are not progressive taxes, that is, taxes calculated to tax the wealthy to help-

Mr Speaker: Order. I think the hon. Member must realise that if he is reading a speech he must read a little slowly, because the interpreters are finding a little difficulty in following him. I have indicated that the Member may refer to his notes, but he seems to be doing more than that.

Mr Ong Eng Guan: Mr Speaker, Sir, there are three types of taxes - progressive, proportional, or regressive. The petrol tax is an example of proportional taxation. The taxi-driver and the salesman pay the same tax as the owner of a Mercedez Benz. Most of the taxes introduced by this Government are regressive taxation, that is, the poor and the wage-earners are asked to contribute more taxes than the rich.

However, the marked characteristics of this Government's taxation policy is not that it is resorting to regressive taxation. The distinguishing feature in the taxation policy of this Government is that it is dovetailed to suit the interests of big European concerns. Out of the 12 new taxes the only contribution from these big European concerns is $1,000. That is all.

Mr Speaker, Sir, it is a known fact that British capital controls our economy. The mode of organisation used is the public limited liability company. May I refresh the memory of the Minister for Finance, quoting from no less an authority than the Manager of the Industrial Promotion Board. Mr J. J. Puthucheary, who wrote a book called "Ownership and Control in the Malayan Economy"? These quotations will serve to bring home the point that our economy is dominated and controlled by European capital through public limited companies. It will also show that it is wrong to tax the shopkeepers in favour of British capital. In the preface on page xiv is written:

`There is a popular view, widely held, that "the Chinese" control commerce. This is false. The estimates in the study show that European-owned firms controlled 65-75 per cent of the export trade in 1953 and 60-70 per cent of the import trade in 1955. European-owned firms held about 75 per cent of the import agencies against some 10 per cent held by Chinese firms.

The popular misconception that commerce is controlled by the Chinese is due to the ubiquitous activity of the Chinese middleman. Certainly a very large number of Chinese traders are engaged in buying and selling. But it is quite wrong to think that in their buying and selling these traders in any way control trade. In fact, the misconception is an "optical illusion" due to the very large number of traders. The control of commerce is in fact in the hands of the exporter-importer, and the import and the export firms are very largely European.'.

And on page xix of the Preface:

`We can, however, say with confidence that the commonly held view that Chinese dominate the economy is false. As yet, the Chinese are mainly middle-men and compradores of European capital. Some have become partners and a few are independent. The capital that dominates Malaya's economy is European.'

And on page xvi of the Preface:

`The most important conclusion, I think, of this study is that much of Malaya's economy is controlled by large-scale units. Of these, the agency houses and the mining agencies are the most important. The belief that small-scale producers and traders dominate the economy is caused by an incomplete understanding of the position of Chinese-owned capital. Another cause of this mistaken belief is the lack of understanding of the extent of the control that agency houses, mining agencies and import agencies have over the economy of the country.

A corollary of this is the importance of public limited companies. People who assume that Chinese capitalists control the economy assume too that public limited companies play a part subsidiary to that played by private companies and family or clan organisations. The second assumption is false because the first is false.

The main finding of this study is the over-whelming evidence that European-owned firms are predominant in almost all industries. Almost all European-owned firms are public limited companies or subsidiaries of public limited companies. Some of the large Chinese-owned firms are also public limited companies. I do not think there can be any doubt that the most important type of business organisation - though not the most common - is the public limited company.'

Mr Speaker, Sir, let me give an idea of what this $1,000 tax means to a public limited company. More than 95 per cent of public limited companies are owned by European capital. The $1,000 tax is a mere facade. In Lyall and Evatt "Handbook of Malayan Stocks and Shares", there are listed 37 public limited companies known in Stock Exchange language as Industrials. I have ignored the tin and rubber companies for two reasons: firstly, the operations of these companies are mostly carried out in the Federation and, secondly, the private companies mostly owned by local capital are more akin in their activities to these so-called "Industrials". Mr Speaker, Sir, these 37 public limited companies classified in Stock Exchange language as Industrials have a capital of $6,064 million and in one year make a profit of $74 million. I lay upon the table a list* of them showing their capital and profits computed from the handbook.

• Copy placed in the Assembly Library.

Out of the $45 million additional revenue raised by this self-proclaimed Left-wing socialist Government, these 37 public limited companies will pay only $37,000 in other words, $37,000 out of $45 million.

Mr Speaker, let me dwell for a few minutes on the so-called company tax in this country. The companies in Singapore do not pay company tax the way they do in the United States, Australia or India. This is a colonial device to protect the profits of the big European firms. The companies in Singapore do not actually pay company tax the way we know it. The present so-called company tax is a misnomer. If I could explain in non-technical language, the 40 per cent tax paid by a company on its profits is being paid back to the shareholders when the company distributes its profits in the form of dividends. The Government collects 40 per cent from the company and pays it back to the shareholders. In theory, the Government holds the money collected from the companies as a security and not as a tax. In other countries even governed by Right-wing capitalists, like the United States, there is a company tax, sometimes as high as 50 per cent or 60 per cent, and this tax is not paid back to the shareholders when the profits are distributed in the form of dividends.

Mr Speaker, the big European firms make millions of dollars annually and do not contribute to the running of the State because of the nature of our company tax.

To illustrate, 40 per cent of the profits of the companies are collected by the Government in the form of the so-called company tax. When a company distributes its profits, the shareholders are paid back this 40 per cent by the Government. Say a shareholder, Mr X, has some shares in a company. He gets a cheque of $6,000 from this company this year. When he declares this income of $6,000 to the Government, what the Government does is to add up his $6,000 to the $4,000, that is, 40 per cent of $10,000 and assess him on a gross income of $10,000. If he is a married man, Mr X will pay $350 tax and the Tax Department will send him a cheque of $3,650. In other words, Mr X in that particular year will receive $6,000 from the company and $3,650 from the Government, making a total of $9,650. In other words, the company pays no tax.

Mr Speaker, Sir, is this not a Government of the big business?

The Minister for Education (Mr Yong Nyuk Lin): On a point of information.

Mr Speaker: If the Member will give way.

Mr Ong Eng Guan resumed his seat.

Mr Yong Nyuk Lin: Is the Member for Hong Lim, as a practising accountant, seriously suggesting that companies do not pay tax at all?

Mr Ong Eng Guan: Yes, Mr Speaker. If what I have been saying the last ten minutes does not make sense yet to one who has had ten years' experience in insurance companies, then the insurance companies must have been wasting their money paying him.

Mr Speaker, Sir, this is a Government of the big business, a Government under the will of European capital. Have we got to search elsewhere for more convincing proof? The Meadows, the Blades and the Thomsons control our political destinies. Mr Thomson's room was next to that of the Minister for Culture and he was writing speeches.

The Minister for Culture (Mr S. Rajaratnam): He was not.

Mr Speaker: Order. I am following the speech of the hon. Member with great attention. If he embarks on these little details, which I cannot relate to the general principles of Government policy which he is supposed to touch on in this debate, then I think he is getting seriously out of order.

Mr Ong Eng Guan: Mr Speaker, Sir, from now onwards, I will not give way to interjections. Thank you.

European capital controls our economic destinies. Why is the Minister for Finance now so frightened of European capital?

May I remind the Minister for Finance of what he said at a P.A.P. mass rally on 22nd March, 1959, and which is reproduced also in page 25 of Part I of the P.A.P. "The Tasks Ahead":

`Without exception all political parties other than the P.A.P. have repeatedly reminded people in Singapore the necessity of depending on foreign capital to finance our industrial development programme. Without exception, these parties placed their hope for our ability to attract foreign capital.

The P.A.P. profoundly disagrees that the survival of Singapore depends on foreign capital and foreign capitalists. We say that there are more than adequate capital resources initially available locally. Indeed, the position is that large sums of local capital are being invested in foreign countries, often in unprofitable investments. The total amount of Singapore capital invested by banks, insurance companies, central government, local authorities and the public boards is not known with certainty. It is probably in the region of $800,000,000. It is absolute nonsense to say that our survival depends on foreigners when so much of our own capital is invested in foreign countries.'

Mr Speaker, Sir, that was before the elections. This Government has now completely departed from the avowed aims and policies of the P.A.P. The taxation policy of this Government in general, and the 1961 Budget in particular, is another concrete proof that what this Government seeks to uphold are the interests of big European capital and colonial interests.

Unlike the Parliamentary Secretary to the Minister for Finance, whose real income has increased more than ten times since May 1959, the people are worse off now than before.

Mr Speaker: Order. I think it is about time I put a stop to all these personalities which seem to be completely irrelevant. The hon. Member must keep away from all personalities.

Mr Ong Eng Guan: Mr Speaker, Sir, let me describe here the problems and the sufferings of our people during the past 18 months.

Taxi drivers. Of all the classes in society, the taxi drivers are the worst hit. First, they suffer a cigarette tax. If a taxi driver smokes 20 cigarettes a day, he has to pay about $6 tax per month. We then come to the petrol tax which makes him incur an additional $30 per month. On the other hand, the taxi fare, for instance, from Bras Basah Road to Upper Serangoon Circus before the elections was 50 cents each passenger, but now it is 30 cents. In other words, very few taxi drivers are charging fares according to the meter. And if the taxi driver is susceptible to the propaganda of this Government and tries to change his fortunes, then he will be encouraged to pay lottery tax, taking into account the increasing number of summonses and heavier penalties. Mr Speaker. Sir, the taxi driver is actually between the devil and the deep sea. He is considered lucky if he can at present earn $4 a day.

Then we come to workers and shop assistants. Their greatest problem is the problem of retrenchment. If he is unfortunate to be unemployed, he would be lucky to get a few dollars from the Social Welfare at reduced rates of relief. The 1961 Budget estimates to get $27 million from the sale of lottery tickets. Out of $27 million, $8 million will go to Government as tax, $11 million will go to the Singapore Turf Club and the millionaire horse owners as profits and expenses, and $8 million will go back to these poor people in the form of prizes. In other words, as a class, the workers and all other poor people who are estimated to buy more than 90 per cent of the lotteries will be made poorer in 1961, by an estimated total of $19 million. This $19 million on the red is a "gift" from this so-called socialist Government.

That is not all. A worker smoking 20 local brand cigarettes daily will be made poorer by the Government by $6 per month. There have been few cases of wage increases in the past 18 months. In 1958, the City Council worker got an automatic increase of 40 cents a day. And now with integration in the air, I am wondering what is the Government going to do. Would the Government reduce the wages of the City Council workers by 40 cents or would the Government increase the wages of the Government workers by -

The Parliamentary Secretary to the Minister for Labour and Law (Mr Wee Toon Boon): Mr Speaker, Sir, on a point of order. Are we discussing the Government's financial policy or are we discussing the labour problem in the City Council?

Mr Speaker: I think what the hon. Member for Hong Lim is trying to get at is the Government's general policy, which includes integration of the City Council. I have not as yet grasped what he is aiming at, but, so far as I can see, he seems to be in order. He is discussing general policies with reference to details in passing. Mr Ong.

Mr Ong Eng Guan: Mr Speaker, Sir, we now come to the hawkers. The 1957 census of population shows that there are 37,180 hawkers and stallholders. Due to the increasing volume of unemployment - the Minister for Labour and Law has given the figures of 11,186 unemployed being registered on 1st November, 1958, i.e. two years ago, and 52,963 being registered on 1st November, 1960, i.e. today - the number of hawkers must also have increased considerably since the 1957 census, which was 37,180 hawkers. More hawkers, more taxes on the poor and the wage earners imposed by the Government would mean smaller incomes for the hawkers. Smaller incomes, heavier penalties, and further economic exploitation by the Government in the form of these soak-the-poor taxes are driving many of the hawkers to semi-starvation. Would the Government understand the problems and the sufferings of the hawkers? I do not think they do. The recent unfortunate incident in St. Michael's Market could have been avoided. There was no necessity to send a riot squad van to chop away the stalls and break the crockery of the hawkers.

Next, we come to the farmers. The 1957 census gave the number of fanners as 24,289. This is another badly hit section of the population. The farmer is now getting less for his produce but has to pay more taxes. Many of the farmers are in debt, which in turn affects the rural shopkeepers, which in turn affects the retailers in the towns supplying goods to the rural shops and so on. The farmers will be badly exploited by the present proposal to increase assessment rates in the rural areas.

Mr Speaker, Sir, we now come to the general wage earner. In my analysis, the classes of people most hit are the taxi drivers, hawkers, white collar workers and shopkeepers. The wage earner or the teacher has to pay several dollars a month more for his smokes, $6 to $10 more for petrol, and a few dollars for lotteries. Is that all, Mr Speaker, Sir? No, Sir, he is now asked to pay more income tax. Among the wage earners, the teachers suffer the most - more hours, less pay. If everybody tightens his belt for the national effort, then well and good. But is that the situation? By no means. The teacher did not get a 10 times increase in income. He is in a most unfortunate position - no occupational mobility except perhaps running away to the Federation - he has to work more hours, get less pay, pay more taxes (petrol tax, cigarettes tax and now income tax).

The shopkeepers. Among the business community, the small shopkeepers are the hardest hit. The increasing number of hawkers due to soaring unemployment share some of their business. But what else can the hawkers do? Contrary to what the Minister for Finance knows, many shopkeepers are affected by the cigarettes tax - for themselves and their customers - and sometimes even the petrol tax if they have a second-hand car used in the shop, and other Government licences and fees. Under the recent amendment to the tax laws, the shopkeeper has to engage extra hands to write receipts, or buy a cash register costing more than $1,000. And when this law is introduced, there is only one type of cash register and that is monopolised by an American firm. The new Business Registration Tax is aimed at collecting $2 million from about 40,000 shopkeepers in Singapore. This is unjust. The change in income tax will also affect the shopkeepers. The cumulative effect of these taxes is that many of them will join the ranks of the unemployed.

Mr Speaker, Sir, this is a Government which believes in taxing the people of Singapore, mainly the poor, the workers, the wage earners and the shopkeepers, for the benefit of the big European companies. This is not an honest nationalist Government. It is a pro-colonial Government. It is a Government for the big businesses. Dr Frederick Benham, foremost authority on the economics of colonies, and the former Economic Adviser to the ex-Chief Minister could not have done better for England, and would be ashamed of himself if he were here today. The taxation and economic policies of our Minister for Finance who succeeded to the post of Dr Benham was in the best tradition of Dr Frederick Benham.

Mr Speaker, Sir, the Prime Minister has also forgotten what he had said. In column 1015 of Vol. I of the Hansard, dated 21st November, 1955, the Prime Minister said:

`Mr Speaker, Sir, a Socialist Government shows itself in its taxation and its expenditure. A democratic Socialist Party seeks through a parliamentary democracy, to introduce taxation in order that money could be taken from those who have and to introduce social services in order that money or benefits can be given to those who have not.'

However, Mr Speaker, Sir, this Government is not a Socialist Government.

In Hansard (12th December, 1958, col. 1217) the Prime Minister said:

`We are surprised that the Hon. the Financial Secretary [i.e. under the former Government] should have had the audacity to say in this Assembly that they can quite safely put up company tax to 40 per cent. He was the same man who told us last year that there should be a safety margin of at least ten, if not more, per cent. We were the first to advocate that they should tax companies up to the hilt, according to British standards, because most of them in any case are registered in Britain or the investors are from Britain. They can easily go up to 9s, in the pound [i.e. nearly 50 per cent] without affecting anybody's pocket other than that of the British Treasury.'.

However, the best description of this 1961 Budget is the one given by the Minister for Health in a debate on the Labour Front's 1957 Budget [Hansard, Vol. 2 col. 676, 19th November, 1956]. At that sitting of the Assembly the Secretary-General of the P.A.P. was absent, and the Minister for Health was speaking on behalf of the P.A.P. Mr Speaker, Sir, if, in the process of my quoting this speech, I could substitute the words "so-called P.A.P." for the words "Labour Front", and the word "S.P.A." for the words "Liberal Socialist", it would make very interesting reading:

`Mr Speaker, Sir, it appears to me that the Labour Front Coalition Government is slowly being absorbed by the colonialism they set out to conquer about a year and a half ago. The Government is ostensibly a Socialist Government. We heard a great deal of Socialism during those happy days when the gentlemen opposite were wooing the voters but that was a long time ago, Sir. Since then, they have been successfully brainwashed by their colonial backseat drivers.

This Budget, Sir, is proof that the Labour Front has been purged of all Socialist deviations. Not only is that Budget purged of every tinge of Socialism but it is utterly shameless in its concern for great business and colonial interests. With the Labour Front Government as a front, the colonial backseat drivers had tried to soak the poor while leaving the rich untouched. I said "tried", Sir, because since the announcements of the Budget, there has been some panicky backtracking. It may be because the Labour Front Coalition Government was particularly impressed by the Liberal Socialists. Even the Liberal Socialists, Sir, felt that the Budget was an attempt to balance the budget at the expense of the lower income workers. Surely the Government could have told the backseat drivers to produce a Budget which looked like a Socialist Budget... Ask yourself. The fact that the blunder over the lower income groups has been put right does not make this Budget any better. In fact, the protests over the injustice done to the low wage earner have only drawn attention to the fact that this is still a Budget designed to aid and comfort big business and colonial interests. This is certainly not a Budget expected of a Party which claims to be Socialist, Nationalist or champion of the Welfare State. The only kind of welfare that this Budget will further is capitalist welfare and, in particular, the foreign capitalists.

The Budget was designed to meet a specific problem and that was the $37 million deficit expected in 1957. This deficit was to be met by the increase in income tax by lowering the basic personal allowance which would have hit hard the lower income group but the higher income group was let off very lightly, indeed so lightly that even the Liberal-Socialists felt happy and jubilant enough to take up the cudgels on behalf of the poor wage earner. For a Socialist Government, Sir - and I hope I am not unduly embarrassing the Government by assuming that it still believes in its election pledges - taxation is one way of bringing about greater equality of income and Malaya is a country where inequality of income prevails. This was the necessary outcome of a colonial economy. There has been no proper survey of distribution of income but a survey of urban income-'

Mr Speaker: Order. May I remind the hon. Member that he is only entitled to read extracts - extracts from books or speeches - but not the whole speech? Perhaps he will confine himself to extracts.

Mr Ong Eng Guan: It will not take another two minutes.

Mr Speaker: Order. But that does not solve the problem. The Member must read only extracts - and short extracts at that.

Mr Ong Eng Guan: Thank you.

`People do not expect anything better of a colonial government but people do expect something better of the Labour Front Coalition Government.'

Mr Speaker, Sir, is it necessary to raise this additional $45 million in 1961? In my opinion, it is not necessary. We can prune down all extravagant expenditure. There is no intention to complete all the Development Estimates. The Development Estimates are prepared in a haphazard manner with hardly any plans. I remember that in January 1960 I instructed the Public Works Department to obtain details of plans from the respective Ministries, particularly the Health and Education Ministries, to submit their plans in order to fulfil the 1960 Development Estimates. Mr Speaker, Sir, I was shocked to learn that there were hardly any plans. On 1st February, 1960, the Public Works Department was taken over by the Prime Minister. He formed a Public Works Standing Committee to run the Public Works Department and to be responsible for all development projects. The Ministry of National Development was refused even the minutes and agenda of the meetings. The Public Works Standing Committee was made responsible to the Cabinet Budget Sub-Committee, its Chairman being the Prime Minister, and its members being the Minister for Finance and the Deputy Prime Minister. The Budget Sub-Committee is not responsible to the Cabinet and does not report to the Cabinet.

For more than a year, Mr Speaker, Sir, the Public Works Standing Committee did nothing. During the few meetings that they had, they spent most of their time talking on the minor works projects, an item in the Development Estimates, from which funds could be allocated for purposes such as beautifying Sri Temasek. The best architects and engineers were directed towards such jobs. Many other architects and engineers remained idle, having no work to do.

Mr Speaker, Sir, the other reason for there being no necessity to dig into the pockets of the poor, the wage earners and shopkeepers in the 1961 Budget is that there is a possibility of reducing millions of dollars of extravagant expenditure, and only our Minister for Finance could set an example. In my opinion, there is no need to dig into the pockets of the people at this hour when times are especially bad. What the Minister for Finance said is not true. He said [Hansard, 29th November, 1960, col. 10]:

`The year under review has been a good one for Singapore. There has been a marked expansion in trade, in industrial output, in the standards of personal consumption, in business confidence, in the conditions of workers, and in the level of public services.'

Mr Speaker, Sir, this is not true, because on the same day the Minister for Labour and Law, in reply to an oral question from an Opposition Member [col. 4], said that there were 11,186 unemployed on 1st November, 1958, and 52,963 unemployed two years later, i.e. 1st November, 1960. Mr Speaker, Sir, these facts speak for themselves. The unemployment figure is the best yardstick of the economic welfare and the prosperity of a people.

Mr Byrne: On a point of clarification, Sir.

Mr Ong Eng Guan: No, Sir, If it is necessary to find this money with the sincere intention of carrying on with capital construction in the 1961 Budget rather than just for the purpose of propaganda, like in the 1960 Budget - window-washing - then boost the economy. Mr Speaker, Sir, we can find the money from other sources. What are the alternatives to the present taxation policy of the Government - a policy to benefit big European concerns? May I put forward some alternative taxation proposals for the consideration of the Government?

1. Reform the present archaic so-called company tax-

The Parliamentary Secretary to the Minister for National Development (Inche Yaacob Bin Mohamed): (In Malay): On a point of order. Mr Speaker, Sir, I am surprised to see that the Member for Hong Lim, who has been speaking for more than an hour, is merely reading his speech, which is contrary to Standing Orders. He is merely reading his speech, as though it has been prepared by somebody outside this House.

Mr Speaker: I have already ruled on that point which has been raised three times. The hon. Member for Hong Lim has been asked not to refer to his notes too frequently. In fairness to him, I think he has tried not to refer to his speech too often, and I think he will probably bear that in mind up to the end of his speech. Mr Ong.

Mr Ong Eng Guan: Mr Speaker, Sir, a speech of such a nature should be carefully delivered because it involves facts and figures. It is not an abstract talk on political propaganda.

I put forward these alternative proposals for the consideration of Government:

1. Reform, the present archaic so-called company tax by stages. The Tax Department wastes much time computing repayments of tax to shareholders. Levy a tax. Let us call it the Corporation Tax for distinction, as practised in India, Australia, or the United States and other countries. This non-refundable corporation tax can be fixed at 10 per cent in the first stage, while at the same time the 10 per cent can be increased by stages to a maximum which will ensure a reasonable profit to investors. At the same time the present so-called company tax should be reduced by an equivalent percentage. This method of taxation will discourage the private companies from distributing all their profits in dividends which they are now doing so as to claim repayment from the Tax Department. This is not healthy for the country at present as it is not conducive to economic and industrial expansion. Later, when the economic situation is better and things are not as gloomy as they are now, an income tax on undistributed profits can be levied to ensure a reasonable distribution of profits as dividends in the interests of the Exchequer. The present tax of $750 and $1,000 on private and public companies respectively is unnecessary. Mr Speaker, this tax proposal will not impose undue hardships on those shareholders who are Singapore residents, due to the benefits from big joint stock companies.

2. Open negotiations with the British Government and the Shell Company, for instance, about paying assessments on their properties. Perhaps negotiate also with the British Government for a tax on their military trucks; some of them are 18-ton trucks and they do not pay even one single cent of road tax.

3. Review the death duties tax. I am sure few people will move their residence to Johore Bahru just for the purpose of evading heavier death duties.

Mr Speaker, Sir, these are my humble proposals. I have not been given time to work them out on a more concrete basis for more details. However, the Government does not lack experts. What they lack is a correct policy in the interests of the people. The experts, after all, carry out that policy. The taxes introduced by this Government to tax the poor and the wage earners should be reconsidered really on the principle of ability to pay. Some of the new taxes should be repealed. Others can be amended or reformed. Those who can afford should contribute more; those who are less well-off should contribute less. The present policy of opening all guns on those who are less well-off and on the poor must be reversed. We are not asking the Government to tax the European firms until they bleed and run away. No, Sir. We only ask that the taxation policy of this Government should be fair and just. After all, Sir, the people of Singapore have waited for long years, and, alas, are still waiting in vain.

Mr Speaker: It is a convenient time to suspend. I suspend this sitting and shall take this Chair again at a quarter to six.

Sitting accordingly suspended at 5.14 p.m. until 5.45 p.m. Sitting resumed at 5.45 p.m.