ANNUAL BUDGET STATEMENT

Debate resumed.

7.20 p.m.

Mr A. P. Rajah (Farrer Park): Mr Deputy Speaker, Sir, may I, in the first instance, congratulate the Minister for Finance on the technical aspects of presenting a Budget of this nature which, for the first time, takes into its fold the revenue of the local government as well as the government itself? I feel certain that it was not an easy task. It has been handled well and I compliment the Minister on it.

When the Minister for Finance made his first Budget Statement in this Assembly one year ago, his tone, his speech and his demeanour were quite different from his tone, his speech and his demeanour on the occasion of his second Budget which, of course, is as it should be. On the first occasion, he was a much younger Minister when presenting his first Budget. I am told that it was his maiden Budget. He was also a Minister of a young, vigorous and virile political Party. A year has passed and, as time passes, decay sets in.

The Prime Minister: You are hoping.

Mr Deputy Speaker: Order.

Mr Rajah: It is so with human beings. It is so with institutions and it is so-

An hon. Member: With the Opposition.

Mr Rajah: - with this political Party. On this occasion, the speech of the Minister for Finance was not the virile speech that it was the last time, nor was the delivery quite so virile. It was quite hesitant in many places and it explained why things had not happened in the way the Minister had hoped would happen; and all these things have made him a wiser man after a year. And now it is a wiser Budget on this second presentation of a P.A.P. Budget in this Assembly.

However, Mr Deputy Speaker, Sir, on the first Budget, I ventured to suggest to the Minister for Finance that it did not need a wizard of finance like himself to be able to end up that financial year with a surplus. He has so ended up with a surplus of $37 million. I am going to suggest to him again this time that at the end of this Budget year he will also end up with a surplus, not because he does not want to spend money - he wants to very much - but because the actions and the policies of the P.A.P. over the past year or so have been such as to curtail the functioning powers of the P.A.P. as a Government. It is one thing to vote the monies, but it is quite another thing to carry out the schemes: to plan them, and then execute them. Policies may be laid down by the Government but those policies have to be implemented by civil servants, technicians and engineers. The failure of the P.A.P. Government - and this reflects itself in the economic life of Singapore - is that they have not been able to manage the government of the country in the way they should have. The management of the Government has been such that the civil service has fallen down on its job, the technical side has fallen down on its job, and the professional side has fallen down on its job; and that is why, Mr Deputy Speaker, we have this surplus. Had all sections of the Government, had all sections of the Executive been functioning as the P.A.P. Ministers had hoped they would have, I am sure that a large portion of this surplus would have been spent; and if it had been spent by the Government, then there would have been greater prosperity in Singapore and a greater feeling of confidence.

Mr Deputy Speaker, Sir, governing a country is a difficult matter. However brilliant the Cabinet may be - on one occasion I did say that we have perhaps the most brilliant Cabinet in South-East Asia - it is not enough to be brilliant in one's academic life or in one's intellectual attainments. One has to translate this brilliancy into something positive which will have its result felt in the State of Singapore. To that extent, the Government have failed, not, it would appear, because they do not want to succeed, but because the manner of approach to the problems, and because the speeches made by certain of their Ministers were such as to create a situation in Singapore where the people have lost confidence. If the Government are seriously interested in knowing why there is this feeling of uncertainty in Singapore-

The Prime Minister: There was.

Mr Rajah: -why there is this feeling of uncertainty in Singapore - not there was but there is - which is increasing from day to day, and unless the Ministers are prepared to do something positive [Laughter] about the situation instead of laughing from their Ministerial Benches - laughing from their Ministerial Benches might save their egos for the moment - it is not going to help Singapore one bit.

Sir, to put it shortly, my advice to the Government is this: create a situation of confidence in Singapore. If you can create a situation of confidence in Singapore, then prosperity will start to come to Singapore. But if you do not, we will go from worse to worse, from one doldrum to yet another worse doldrum. That is what will happen.

The Minister for Finance has given certain figures which, on the face of it, must mean that Singapore is prosperous. I was very impressed with those figures. I asked my colleagues, "Could we be wrong? Why are the people all around us feeling so depressed? Why do they say business is so bad? And yet the Minister for Finance is quoting figures which, on the face of it, would indicate that we are riding on a wave of prosperity." Mr Deputy Speaker, Sir, if anyone were to walk along the streets, of Singapore - one of the curses of being a Minister is that he cannot walk in the way he did when he was not a Minister - he would find out that the people are depressed, that the people are not earning as much as they did, and that there is a general feeling of economic stagnation in Singapore. The Minister for Finance has said that the money in circulation is as high as, if not higher than, it was before.

Dr Goh Keng Swee: The same.

Mr Rajah: The same. And yet there is a feeling of depression.

The Prime Minister: There was.

Mr Rajah: The Federation is enjoying a prosperity which it has not enjoyed for some time, and yet Singapore which should share in that prosperity or in that feeling of prosperity has not got it. If the Minister for Finance were to take the trouble to go across to the Federation some time and spend a week or so there, he would feel that in the Federation, there is buoyancy, there is hope, and that the people are thinking there is a future there economically.

Mr Rajaratnam: You are not thinking of going there, are you?

Mr Rajah: When I go over there, I will take the Minister for Culture with me. We might then be able to do some cultural work there together. However, Mr Deputy Speaker, Sir, we are not on culture at the moment. We are on the even more difficult matter of trying to keep Singapore in a position where it will be able to appreciate culture because, on an empty stomach, one does not think of culture.

Mr Deputy Speaker, Sir, the economic policy of the Government, for the first time, has been set out in a guarded, a right-handed and left-handed sort of manner, without going into it very carefully; what the Minister wants to say is that he finds himself in a capitalistic state of society, that he finds he cannot alter it because of circumstances beyond his control, and therefore he has to accept and to work the situation as he finds it; otherwise there must be economic collapse and chaos. I congratulate the Minister on making that statement in the Assembly, because it must have been a very difficult statement for him to make, seeing that what the P.A.P. were seeking to give outside before the elections is something quite different. People had expected that there would be a radical change in the handling of the economic situation in Singapore, but, however, it appears that the present Government has changed its policy. If that is true - and it must be true because the Finance Minister says it - then it is up to the Government to see that capital and labour work together. And if the Minister for Finance says, "I want to encourage capital", and his other Ministers or Backbenchers make statements in the Press - sometimes the Ministers and Backbenchers do this in one day, each one speaking a different tongue and giving different views - why, in one Sunday paper there was the Minister for Finance side by side with the Minister for Labour and one of the Backbenchers (not all appeared in the same page but they were all in the same paper) all saying quite different things, one not compatible with the other - then that is not the sort of thing, Mr Deputy Speaker, Sir, which would engender confidence in Singapore; certainly not in the mercantile community. If the Minister for Finance wishes to engender confidence in the mercantile community, then I would suggest to him that when the Ministers or Backbenchers make statements which are not compatible, he would at least see to it that they do not appear together in the same page of the same paper on the same day.

Turning to some of the specific proposals for taxation for the forthcoming year, my colleagues on this side of the House have dealt with the various aspects of the taxation policy and the various items on which the Government proposes to increase taxes. There is only one item on which I wish to address the House this afternoon, Mr Deputy Speaker, and that is the question of professional taxation, "Fees levied on certain professions", Hansard, Vol. 14, No. 1, col. 47.

Sir, I am not at the moment concerned with the fees which the Minister proposes to levy on certain professions. I wish to deal with the profession of advocate and solicitor, not because I want to deal with that particularly but because I think that I might be able to put my points better as I know that profession better. Originally the fee for admission for an advocate and solicitor in the Colony of the Straits Settlements was $500. That had been so for some considerable time, until I think about 1948 or 1949 when it was reduced to $50. The fee for admission of a solicitor in the United Kingdom prior to 1948 was, I understand, £50. When the first Labour Government or some other Labour Government - anyway it was a Labour Government - came into power in the United Kingdom and formed the government, they reduced the fee from £50 to £5. The basis of the argument was that the right to practise a profession was the right to work, and no government had a right to tax a man's right to work, to earn a living. It is a question of principle - that the right to work in any system of society should be free and unfettered. Now, the Minister might well ask me, "Why then was the fee of £50 charged in the first instance?" I think it was because a fee of £50 was felt not to be a fee for admission but a fee very much higher than a licensing fee. And because of that, it had been considered to be in the nature of a taxation, and the fee was reduced to £5. When it was reduced to £5, Singapore after some time followed suit, and reduced the fee to $50.

The present Government proposes to increase that $50 to $250, and the suggestion is that professional people can afford it. Mr Deputy Speaker, Sir, in all humility, I say to the Finance Minister that not all professional people can afford to pay it.

Dr Toh Chin Chye: Surely you can!

Mr Rajah: Sir, I am not speaking for myself; I certainly can afford to pay! But I would like to inform the Deputy Prime Minister that there are a number of my professional brothers outside who will find it difficult to pay, particularly when one realises that every year we are getting 20 people from England admitted to the profession, and we are now going to the University of Malaya which will give us a number of professional lawyers also. And when all these people come into the legal market in Singapore, I can assure the Deputy Prime Minister that they will not have it so good. And, Mr Deputy Speaker, Sir, young professional people have not developed a cynicism which Readers in universities have developed; not for some time. They are full of life and full of hope; they are not cynical yet. But when one reads too long in universities on abstruse matters, one tends to become cynical. And one can understand a Deputy Prime Minister who has been a Reader at a university getting that way. But I think it is not a good thing. Mr Deputy Speaker, to get cynical in one's young age, particularly when one is a bachelor.

Sir, I put the point to you that the sum of $250 is in the nature of a taxation and is not a sum which one can equate to a fee. Over and above that, it has been suggested that this particular profession should be called upon to pay a fee of $500 a year, payable every quarter at $125 per quarter.

7.38 p.m.

[Mr SPEAKER in the Chair]

Mr Rajah: So that a young barrister or a young solicitor who gets himself enrolled in Singapore as an advocate and solicitor pays in his first year an admission fee of $250; and before he can practise he has to pay a quarterly fee of $125, which immediately makes the fee in the first instance $375. Over and above that he has to incur expenditure in the way of acquisition of books and other material, without which he cannot practise. And this $375 is a terrible burden, Mr Speaker, on young lawyers. Young lawyers have already approached me and put their point to me, and I speak now in this Assembly voicing their views.

If the Minister thinks that professional people are making money - yes, some are certainly making money, but not all, and certainly not young lawyers - might I make a suggestion to the Finance Minister that if he feels that he must go through with his proposal for a professional levy, might I ask him not to make this levy on what we call junior advocates and solicitors; in other words, anybody who has practised for less than seven years should be exempted from paying this fee but should be called upon to pay this normal fee. And if the Minister feels that this tax should be imposed, then let it be levied-

The Prime Minister: It falls on the senior partners. The senior partners pay for it.

Mr Rajah: -on the people who have had more than seven years' practice. The Prime Minister has been very fortunate in his practice. He has always had a boss to pay his fees for him. But there would be others not quite so fortunate as the Prime Minister has been in his professional practice. He had it good because he got here first. But let me assure the Prime Minister, through you, Mr Speaker, Sir, that very few undergraduates coming out from Singapore are likely to have it as good as he had it when he came out. And let us not forget that the Prime Minister is not an ordinary man.

Sir, so much for the practice of the professions. But the main point I wish to make on behalf of the professional people is that this socialist Government, and a socialist government must encourage people to work, seems to pick on certain people and say to them, "You, I am going to discourage. Why should you be allowed to work without paying the Government a tax?" Next time will this Government charge the clerk a fee to ply his work as a clerk? Where does this stop, Sir? Once you break into the principle that in order to be permitted by the State to work, you must before you work pay the State a tax in advance. Once that principle is forced through this Legislature by the present Government, particularly by a socialist Government, what is there to prevent any other government from coming along and saying, "Before you can be engaged as a labourer, you must pay $3 or $5 per year."

Dr Toh Chin Chye: That is not private practice. Clerks do not go into private practice!

Mr Rajah: Or if a clerk wants to work for somebody else, is the Government going to charge him a fee? Once this principle of the right to work without being taxed by the Government is abrogated, and if that abrogation comes from a socialist Government, then I think I must agree with the Member for Hong Lim - when he asks - what kind of a socialist Government is this? On this occasion, we are happily agreed.

Mr Yong Nyuk Lin: Friends!

Mr Rajah: Sir, there are other aspects of this Budget which I do not wish to touch upon at this time because the time to debate it is limited, but I will raise them in the Committee of Supply.

7.43 p.m.

The Parliamentary Secretary to the Minister for Home Affairs (Dr Lee Siew Choh): Mr Speaker, Sir, we have heard quite a great deal about what many Members of the Opposition have called, and especially what the Member for Hong Lim has chosen to call, the so-called socialist P.A.P. We have also heard a lot of rather irrelevant details, especially from the Member for Hong Lim, all on nothing. I do not intend to go into details. I will only touch on general principles.

They all claim that the P.A.P. Budget is not the Budget of a socialist government. There are many types of socialist governments or socialist parties. In Singapore alone we had Lib-Soc socialism, later on S.P.A. socialism, and we have a new addition, Hong Lim socialism. I wonder if they understand what socialism really means, or what a socialist economy really entails. It is not my job here this evening to teach them, but I feel obliged to enlighten people who have been so ignorant of the greatest - at least one of the greatest, if not the greatest - of political philosophies in the modern world.

First, let me tell them how a socialist government goes about the socialisation of an economy that is essentially and basically capitalistic, especially in a backward and under-developed semi-independent country like Singapore. For the benefit of the Members of the Opposition, the basis of Socialist construction is industrialisation. It should be plain even to people who know nothing about economics that industrialisation and the construction of factories mean more jobs and more opportunities for employment for the people, especially so in Singapore which has limited resources and a rapidly increasing population which has been described as "explosive". You may notice, Sir, that we have recently held our family planning campaign and, of course, the industrialisation programme of the P.A.P. Government.

To come back, however, how do these countries embark on industrialisation? Let us look at history a little. Some countries industrialise through plunder and the exploitation of colonies through decades and for ages. There are others that industrialise through the winning of wars and the exacting of heavy reparations from the defeated enemies. Still others industrialise through leases or concessions and loans in enslaving terms. All this, Sir, Singapore cannot do. It leaves only for us to go back to industrialisation through our own efforts.

Now, how do Socialist countries industrialise through their own efforts? To industrialise you have first of all to need capital. And how do we get that capital? Let us look around again and find out how certain Socialist countries get their capital. The Communist countries acquire their capital in various ways. First, there is the method of expropriation of lands and properties and the other means of production. Then there is the method of nationalisation of key industries and other dictatorial methods that will provoke stubborn resistance or even armed resistance.

Now for the benefit of the Member for Hong Lim (unfortunately he is not here), the P.A.P. Government is a Socialist Government. It is not only a Socialist Government but also a Government that believes in constitutional advance through parliamentary democracy. In other words, the P.A.P. Government is a Government that believes in and carries out democratic Socialism. What do we do in such a case? Can we go about dictatorially and start nationalisation and expropriation of all the capitalists? Is that what some of the Members opposite want? Do they know what that means? It will only mean armed revolution, and the P.A.P., as we have very often repeated, abhors violence.

So the only alternative to the P.A.P. Socialist Government is to go about acquiring capital in a democratic and constitutional way. Some of the ways are by saving and the husbanding of resources, or by ensuring that there is no waste and dissipation of whatever resources there may be, or by channelling these resources into useful and purposeful projects, and, of course, by calling for local loans. So in the context of Singapore whose economy is entrepot and basically capitalistic, and whose economy is also linked with capitalist countries of the Western bloc through external trade, it becomes doubly difficult for a Socialist Government to go about socialising such an economy. Previous Governments never did anything in the way of making provision for the employment of our fast expanding population that come out from our schools. It has to be left to the P.A.P. Government to plan for industrialisation, so that all the people of Singapore may have a chance of gainful employment. As has often been repeated, Sir, the fruits of toil never fall down from heaven. We have to work hard and toil for whatever fruit that we can get. The P.A.P. Government is at the present moment embarking on a most difficult experiment of democratic Socialism in Singapore. It should be the aim and hope of each and every one of us to see this experiment succeed.

Some of the Opposition Members have said that we go for class ideology. Some of them say that we are not Socialists, not left enough. Let them all realise that we, as democratic Socialists, are working democratically and constitutionally to lay a foundation for the final objective of a society that will give the maximum satisfaction to all our cultural and material requirements. In our present Budget, it is absolutely untrue that the poor has been taxed. Anyone who is worth his salt knows that the introduction of earned income is a special move to help the working man. Sir, I support the Budget unreservedly.

7.53 p.m.

The Parliamentary Secretary to the Deputy Prime Minister (Mr Goh Chew Chua): Mr Speaker, Sir, this is the second Budget presented by the People's Action Party Government, and framed in the light of the last Government's experience. You will remember, Sir, that the Prime Minister, in his speech during the debate on the Yang di-Pertuan Negara's Speech, described the second year of office of the P.A.P. Government as a year of construction. This fact is well reflected in the Budget which was presented to this Assembly by the Minister for Finance last week.

The Budget makes provision for considerable expansion in the field of social services and industrial development. Sir, it can be seen that the P.A.P. Government is resolved to pursue vigorously its policy of industrial expansion. Industrialisation is for Singapore the only available means of providing employment opportunities for our growing young population. The economic basis of Singapore has to be modified from that of a commercial entrepot to an industrial one. Even with the rate of expansion which can be expected in Singapore's international trade, there will not be enough of new jobs for the vast numbers of young Singaporeans who are coming into the labour market year by year.

Preliminary planning for a five-year development plan is now going on in the Ministry of Finance, and we can expect to see a detailed plan published early in the new year. We hope, Sir, that with the continued stability in Singapore under the P.A.P. Government, more and more foreign capital will find its way into Singapore and supplement our own efforts at industrialisation.

Side by side with our proposals to bring about an industrial economy, the Government will also have to take into account the necessity to maintain and improve the highest standard of social services available for our people, and the programme both in the fields of education and health is enormous. The funds available to the Government, Sir, have to be well apportioned among the departments of Government which provide these social services. The continued expansion of educational facilities, building schools and employing teachers and the expansion of health services in the rural and city areas call for a high rate of capital investment. The expansion of these facilities, Sir, also makes heavy demand on the existing Government machinery.

It can be seen from the Budget that the Government has almost achieved its aim of abolishing the cumbersome local government machinery and incorporating most of the functions of the former City Council into the Central Government. It can be expected, Sir, that when this process of integration is completed, it would facilitate the provision of social services to the people of Singapore.

We have also noticed, Mr Speaker, that during the last twelve months the Government has made considerable progress in regard to the organisation of community associations. The People's Association has now co-ordinated social services and is also taking over the administration of community centres. As regards public assistance, we hope that as more and more jobs become available to our population, the Government can bring about some reduction in the amount of money that is now being spent to assist the unemployed.

Sir, it is obvious that to bring about the proposed expansion in the spheres of industry and social services, certain adjustments will have to be made to the existing tax structure. Every proposal, Sir, which was presented by the Minister for Finance has been well received. The additional revenue which is required to implement our programme of expansion will have to come from these revenue proposals. As the Minister has pointed out, Sir, we still remain one of the most lightly taxed countries in the world. The Government has given consideration to the necessity of spreading out the effects of these new taxes as equitably as possible. As a Socialist Government, Sir, we believe in the principle that the heaviest burden must rest on the strongest shoulders. At the same time, we should be on our guard. Will these taxes in any way kill the incentive without which our development plans cannot proceed? As the result of the stringent economic policy of the P.A.P. Government during the last 12 months, we are now in the happy position where the Minister for Finance has indicated the readiness of the Government to consider the question of restoring in part the variable allowances which were cut soon after we took office. I have no doubt, Sir, that as Singapore proceeds along the road to prosperity, our civil servants will be able to get back as much of their variable allowance as the finances of the State would permit.

This Budget, Sir, presents yet another milestone in the P.A.P. Government's progress towards achieving its long-term objective, which was made public in our election manifesto. It is the responsibility of the present Government to ensure that during the next 3½ years, they will have made some progress towards achieving a more equal and just society. The people of Singapore, Sir, I am sure, would not grudge such sacrifices and such extra effort as would be required of them.

8.02 p.m.

The Parliamentary Secretary to the Minister for National Development (Inche Yaacob Bin Mohamed): (In Malay): Mr Speaker, I fully support the Government's financial policy as presented by the Minister for Finance. A genuine government is one that presents facts to the people and not put in something which is ambiguous; neither does it give an estimate which is full of theories, because the Government side is not full of theoreticians as claimed by the Opposition side. They also claimed to be Socialists. But we do not know what kind of socialists they are.

Mr Speaker, we have heard a lot of things, especially from those Members who have put up many questions asking for elucidation from the Minister for Finance. There are also those who attack us. But, unfortunately, when we start to give elucidation, we find that the seats on the Opposition side are empty.

Mr Speaker, I do not wish to speak at length on this matter, because what has been expressed by the Minister for Finance is clear. But I would like to touch on the subject mentioned by the Member for Mountbatten relating to the things that were perpetrated by the ex-Minister for National Development regarding the S.I.T. She said that had the former Minister not been expelled the mismanagement would have continued until today. This is most misleading, because the Government is aware of it. The Singapore Housing and Development Board was established in January this year, a few months before the expulsion of the ex-Minister for National Development. This indicates that the Government is always aware of the interests of the people of Singapore, and that it will always do all it can in its power for them.

Mr Speaker, I should not mention this matter, but the Member for Kampong Kembangan has in his review of the Government economising on expenditure taken the opportunity to challenge or accuse the P.A.P. Government. He has stated that the P.A.P. organ challenged U.M.N.O. Members in this Assembly to resign their seats and contest the by-elections in their respective constituencies. This is most confusing, Mr Speaker, Sir. We have never issued a challenge to anybody, because we know that it is no use. What actually happened is that the U.M.N.O. Members in this Assembly were challenged by other U.M.N.O. members, who were faithful to the directive of Tunku Abdul Rahman, the President of U.M.N.O., Malaya. The domestic crisis in U.M.N.O., therefore, should not be mixed up with the affairs of the P.A.P.

Apart from that, the Member for Kampong Kembangan also seized the opportunity, when he touched on the estimated budget for the Ministry of Culture, to sing old tunes regarding what took place between myself and the Minister for Health. Actually, after the incident, I was approached by a number of officials, especially the President of the Literary and Language Congress, who expressed their regret at the Member for Kampong Kembangan touching on the question of culture, because they felt that cultural matters should be left to cultural bodies and organisations to deal with and should be looked after by those people who are really in the know about cultural matters. Mr Speaker, the Member for Kampong Kembangan said that the Government, in the course of carrying out cultural works, should force the people to practise a Malayan culture based on the concept of the Government. It is not our intention to force something on anybody. But the responsibility of a government is to give every encouragement to the people so that they may have self-respect for the various cultures that are to be found in Singapore, with a view to creating a Malayan culture.

The Member for Kampong Kembangan also accused the Government of ignoring the special position of the Malays as embodied in the Constitution. Mr Speaker, I feel I can ask this question: During the four years of the coalition Government led by Tun Lim Yew Hock and his colleagues, to what extent had they gone to help the Malays as compared with the efforts carried out by the socialist P.A.P. Government towards the Malays? I would like to reiterate that the memorandum of the Malay Education Council, submitted to the Coalition Government of U.M.N.O., M.C.A. and Labour Front in 1950, was put into cold storage until 1957. The P.A.P. Government never practise that method with reference to any particular demand submitted by the Malays, because it is our policy to give all assistance to the Malays who have been ignored by previous colonial governments.

Mr Speaker, Sir, I have observed that many Opposition Members have moved amendments to the Head, Ministry of Education. I have no doubt that the Minister concerned could explain the position. The Member for Kampong Kembangan said that the Government provided low-cost houses at the expense of the economy of the Malays. Mr Speaker, the question of drawing up a plan for the economic uplift of the Malays is not an easy task. Mr Speaker, our help to the Malays is based on giving them education, because it is through education that their economic and living standards will be raised.

I hope that my brief elucidation will clear up the confusion caused by persons in responsible positions who make political capital out of the so-called special position of the Malays, as though the present Government is neglecting the Constitution. We believe in deeds, and I am sure that what we have done for the Malays will prove this.

8.13 p.m.

The Minister for Education (Mr Yong Nyuk Lin): Mr Speaker, Sir, earlier this evening the House was given a very short entertainment by the Member for Tanglin when in his speech in which he fought strongly for the partial restitution of variable allowances for the civil servants and aided teachers, he made the statement that should he get a restitution he would donate it to the unemployed. It is, I think, public news that the Member for Tanglin will have retired from the education service in three weeks' time; so that it is very likely that he will not receive any partial restitution of the variable allowance because it will only be effective in 1961. Therefore, he will be making a contribution which would not-

An hon. Member: Be retrospective!

Mr Yong Nyuk Lin: - materialise. And probably he would be in need of it then should it come about. Regarding his argument that if there is a surplus in the Government budget for the year, such a surplus should go back to those members of the public service who were affected by the cut in the variable allowances, I am afraid that he fails to realise that the Government is responsible to the people not on an annual basis but rather on a long-term basis. If the Government has not been able to cut down its expenditure - especially the annually recurrent expenditure for a number of social services for the State - that sum of money which is available should not be frittered away but should be set aside either to reserves or be ploughed back for the purpose of development, that is, for the future prosperity of the State. So if there have been surpluses for the years 1959 and 1960, these sums of money would be needed for the industrialisation programme of the State.

Earlier this evening, the Member for Hong Lim was talking loudly about company tax, and he went even as far as to say that the present company tax was no tax at all. You will remember, Sir, that I stood up and put a question to the Member for Hong Lim - who is not in the House at the moment - whether as a practising accountant he seriously meant that companies, in fact, do not pay tax. His answer, which is typical of him, was a passing insinuation that I did not know what I was talking about. I do not profess, Sir, to be a practising accountant, but I think I know a little about accounts and income tax laws. I am afraid the Member for Hong Lim is not quite an accountant and I fear for the clients who go to him for such service if he cannot interpret the income tax law for their benefit. According to the Laws of the State, Chapter 166 on Income Tax, Part XIII - Rates of Tax, Rights of Deduction and Allowances for Tax Charged, section 43 states:

`Subject to the provisions of section 40 of this Ordinance there shall be levied and paid for each year of assessment upon the chargeable income of-

(a) every company tax at the rate of forty per centum on every dollar of the chargeable income thereof.'

What happens is this. Before arriving at the payment of dividends, a company will be charged tax on its profits. Let us say that a company has made a profit of a million dollars; then the tax would be $400,000. It is left to the company then to decide on the rate of dividend which it would like to pay to its shareholders. I am afraid that the Member for Hong Lim has somehow got confused with the question of tax on dividends which the company is permitted to deduct but which it will hold in trust for the Government. That is referred to in section 44, the next section to the section I have just quoted, where it says:

`Every company which is resident in Singapore shall be entitled to deduct from the amount of any dividend paid to any shareholder tax at the rate of forty per centum on every dollar of such dividend.'

Therefore, if the company should make a million dollars profit, it is taxed to the sum of $400,000. If the company wishes to declare a dividend equivalent, say, to $100,000 to its shareholders, then it is entitled to pay out the net sixty per cent and hold back forty per cent for which it will have to account to the Government under section 44 (3) which reads:

`At the end of each year of assessment every such company shall render to the Comptroller a statement in such form as the Comptroller may direct, showing the total amount of the tax which has been deducted from all dividends...'.

And this sum is accountable to the Comptroller. Therefore, far from not knowing what I am talking about, I am afraid that the Member for Hong Lim who professes to be an accountant does not know what he is talking about. May I now refer to page 3 of the Annual Report of the Income Tax Department, 1958, which was tabled in this Assembly on 30th December, 1959? It reads:

`Section 3. -REVENUE

Revenue collected and paid into the Consolidated Fund totalled $81,428,695.'

Lower down the page, it reads:

`(b) Allocation.

The tax assessed for 1958 up to 31st March, 1959, amounted to approximately $85½ million.'

Then there is a sort of summary which states "Companies ... Resident and Non-resident" which came up to 68 per cent tax collected for the State. So, far from there being no tax on companies, the companies are paying 68 per cent of the tax received by the State. I think I will have to request my colleague the Minister for Finance to look into the accounts of the clients of the Member for Hong Lim as to whether they have been fiddled.

I will now deal with the point raised by the Member for Hong Lim - who is absent - on the development plan of the Ministry of Education as being a Ministry without any plan at all. He mentioned the fact that in January 1960, when he was the Minister for National Development, he asked the Director of Public Works about the development plan of the Ministry of Education, and he got an answer that there was none. Mr Speaker, Sir, this gives me an opportunity to say a few words about the former Minister for National Development. Soon after I came into office, I got wind of his tendency to what is called "a land grab". As the Minister for National Development, he was in charge of the Land Office and construction, and every available piece of land was grabbed by his department of course for the purpose of building houses, because he was also in charge of the Singapore Improvement Trust. Well, the people concerned with an aided school known as St. Margaret's School came to see me. They said that acquisition of a piece of land which was allotted to them for the purpose of building a new school had been turned down by the S.I.T. on the pretext that that land was to be used for the building of houses. I decided not to take action then because this was land which was partly to be used as a playing field, and I felt that perhaps the ex-Minister for National Development was really desperately in need of land. After a few months, I had another complaint from my officials that a piece of land in Selegie Road/Short Street was being frozen also for the purpose of building flats. This time I decided to take action, and I had a reply from his junior officer. In fact, I wrote a personal letter to the ex-Minister and asked him for a discussion, and this supposedly colleague of mine did not even have the courtesy to reply to my letter but instructed his junior officer to write to me to say that such a thing did not take place. A few months later, I had occasion to tick him off over the telephone. I said that he should write a letter of apology, which he did. It just shows that If there was a lack of building activity during the time when the Member for Hong Lim was the Minister for National Development, it was due to his stranglehold on every Ministry except his own, that there should be nothing coming up except what he thought should be built. For example, he had a fanciful idea of building $450 million worth of houses for the State of Singapore. That was all a pipe-dream. The statement was unauthorised and he did not even have the decency and the courage to say that he released it. Instead, he blamed the pressmen for having got something out of him without authority. Far from there being no plan for the development of schools, there is a concerted drive, as stated in the Budget Statement made by the Minister for Finance, that the 1961 Development Plan is in accordance with the Five-Year Development Plan which all Ministries were asked to bring together before-

Mr Ong Eng Guan: On a point of clarification.

Mr Speaker: If the Minister will give way.

Mr Yong Nyuk Lin: No, I will not give way. We are now building schools with the co-operation of the Ministry of National Development. It was not so in the past. We never got that in the past. The Plan envisages 19 new schools each year: 14 primary and 5 secondary schools. We go according to plan and we work in co-operation with one another - no more the failure nor the dismal exhibition of the Member for Hong Lim when he was the Minister for National Development.

I come now to the Member for Farrer Park. Unfortunately, he is also not here. He spoke on the new tax which the Government proposes to introduce for the professional workers and he said that the right to work should not be fettered. The Budget of this Government for 1961 does take into account the socialist principle of encouraging every citizen to work for his livelihood. That is why for this year we have introduced a 20 per cent relief for earned income up to a maximum of $1,000. This will take care of the majority of the salaried workers who, as single persons, will get the equivalent of $5,000 per annum. And that, I think, takes into account the majority of those who are in the lower-middle class outside the net for income tax.

In conclusion, Mr Speaker, as I have said earlier on when commenting on what the Member for Tanglin had to say, the Government is to be judged not on a year-to-year Budget alone but at the same time on its development plans for the future. It will be seen that our plan envisages the expenditure of $876 million, vide Hansard of 29th November, 1960, Volume 14 No. 1, column 41. It is the intention of the Government to spend as capital expenditure the fantastic sum of $876 million, of which $500 million will be from our own efforts, and we hope to bridge the gap of $376 million either from overseas loans or assistance from overseas. It is only by ploughing back all that we have (all our surpluses) that we will be able to build a base for the future prosperity of the State. And therefore I fully support the Budget proposed by my colleague, the Minister for Finance.

8.31 p.m.

The Minister for Culture (Mr S. Rajaratnam): Mr Speaker, Sir, during the last few hours we have had different views expressed by the Opposition about the Budget policy outlined by the Minister for Finance. For example, the Member for Tanglin thinks that the Budget is too Left, that it stresses too much on class issues and that it holds no lolly for the well-to-do gentlemen with whom obviously he has been hobnobbing and whose views have been transmitted to us during the course of his speech. The Member for Cairnhill takes a rather confused view. On the one hand, he thinks we are not socialist enough, and on the other hand, he thinks we are too socialistic in our approach and, therefore, frightened off our investors. The Member for Joo Chiat also thinks that this is not a socialist Budget. The Member for Farrer Park, after congratulating the Minister for Finance for producing an excellent Budget, goes on to express doubts about the validity of some of the taxes which have been imposed.

Sir, I can sympathise with the hon. Members opposite over their predicament when dealing with the Budget policy outlined by the Minister for Finance. They have to play a role which becomes increasingly awkward and tedious with each passing day. Their predicament is this: they tried very hard before the elections to convince the people that the P.A.P. Government must bring terror, chaos, strife, and economic misery, and that there must be a gradual decline of business and trade. That was what they solemnly stated in the newspapers. They swore to the electorate that if they elected a P.A.P. Government, these things must come about. Fortunately the converse has been true. They know it, as you can judge by the demeanour of the Opposition Members, who do not look frightened or impoverished, and they certainly look with confidence to the future. But politically they have to maintain this pretence - that there must be chaos, oppression, and terror. So the less true the myth that they propagated during the elections becomes, the more difficult it is for them to try to whip up a feeling of pretence that there is uncertainty, and oppression and that the people are more miserable than they were before. So today they have tried to present the Budget as an oppressive and unfair one. But is it oppressive or unfair?

Sir, the Minister for Finance made it quite clear in his Budget statement that, in formulating its Budget, the P.A.P. Government has certain social and political purposes behind it. Briefly, these revolve around two questions. First, the Budget is formulated with a view to expanding the economy, and, secondly, to bring about greater social and economic justice. These are the two social goals aimed at in the Budget policy outlined by the Minister. In the past, there have been governments which had also declared these aims, but because they were either controlled by colonial officials or - by representatives of vested interests, the Budgets that they designed - though they might have proclaimed admirable intentions - were, in fact, deigned to protect the interests of those classes which had control of the government. Nobody can say that this Government has either colonial vested interests or representatives of wealth in its midst, and therefore we have no reason to defend the interests either of colonialism or of vested interests.

I know, Sir, that not many of us like to pay tax. If we could avoid paying taxes, we would certainly try to do so. But the first question to ask here is are these taxes necessary? The answer to that question will depend on what uses the taxes would be put to. If we have an inefficient government or a government composed of men who are more interested in filling their pockets and setting up enterprises in other parts of the world, or men who work for and in the interests of a privileged minority, then all taxes become oppressive because they would be used for strengthening an inefficient, corrupt and reactionary government. But where taxes are used responsibly to expand the economy, to make life better for the people, to ensure a more equitable distribution of wealth and opportunities for the people, then taxes cease to be an imposition on the people because the taxes will eventually be returned to the people in the form of more schools, more hospitals, better social services, an expanding economy, and opportunities for more jobs. Therefore, the thing to do is not to ask whether the tax is good or bad, but to judge the goodness or badness of the tax by asking to what use would the money collected from taxes be put. Are they going to be spent on enriching selected individuals, either inside or outside the government, or is the money going to be used to enrich the material and cultural wealth of the people? But I know, Sir, that the Opposition cannot afford to ask these questions because, if they have regard for facts, then they would know that these monies are going to be transformed into services for the people. But they have to keep up this pretence of increasing misery under a socialist government, and therefore they try to exploit this natural disinclination of the people not to want to pay more taxes than is necessary. Sir, they might say that these taxes are unnecessary and that there is no need for these taxes; but during the course of the next year the same people will get up and say, "What is the Government doing about building more schools?"; "What is the Government doing about building more hospitals?"; "What is the Government doing about providing more jobs?" The Government cannot produce all these by just introducing a Bill and saying that this Bill will not cost the taxpayer any money. To do these things, Government needs revenue, and revenue does not come out of the pockets of a government. It has no private coffers, but it comes by way of taxation. And therefore, even long before the elections, the P.A.P. has taken the view that prosperity, expansion, and a better life cannot come about under the slogan of "prosperity by shaking legs". If you want prosperity, you must work for it. In fact, just before the elections the P.A.P. outlined its economic proposals in which it is frankly stated: (a) that socialism is not possible under the present setup, and therefore all the doubts that have been expressed about this policy, that it is not 100 per cent socialist, are groundless. We have never claimed it to be 100 per cent socialist. All we said was that we shall try to do what we can to rectify such injustices as may exist within the present framework. And that is all that this Budget claims to do. And (b) that economic expansion and reconstruction in Singapore would entail sacrifices on the part of everyone, including the workers. When that was published, I remember some of the newspapers and Members of the Opposition making capital out of it. In fact, a leader of one Party who is no longer represented in this Assembly gave a long interview to the Press wherein he said, "This shows that the P.A.P. is not fit to be a government because it enunciated an economic policy of what he called `policy of desperation'."

We knew, and we frankly stated, that if we wanted prosperity, everybody had to make sacrifices, from the wealthiest down to even the worker. In the past, Singapore had been built on the sacrifices of many people, but the majority who made the sacrifices reaped only a small fraction of the benefits, and the people who really benefited out of the sacrifices made by the community as a whole were the minority. But under the P.A.P. Government, unlike the previous government, certainly this Budget tries to put forward the view that if it is prosperity that is wanted, then everybody has to pay; and the sacrifice will be distributed fairly - those who are better off will have to make more contributions to the community's coffers, and those who are not well off, less so. Therefore, it is very easy to say, "Why put up these taxes?", "Why not go without taxes?". In fact, Sir, if this Government were mad, it could perhaps follow the implications or some of the suggestions put forward, including those of the Member for Hong Lim who has said that taxes are unnecessary. We could say that we will dispense with all taxes for three or four years; that we can all make whoopee, and perhaps we can be returned under conditions where it will not be necessary for, and perhaps there will not be, an Opposition. We could live on our capital; we could disburse rewards; increase everybody's salaries; free housing, free schooling, free clothes, and even free food. That sort of policy is not one which the P.A.P. is willing to follow, because we know that that will eventually end in misery and starvation. And all the things that would come about as implied by the Opposition would be a situation of terror and starvation and misery. We have always stated quite frankly that every advance is made through the efforts of the people, and these efforts include sacrifices and hard work. Because it is only in that way that we can show that the democratic system which we are trying to establish can work. It is the people who have voted us in today - we have transferred political power to the community as a whole on the principle of one man one vote. The majority of them are underprivileged. They live in a society which has never given them a chance, and they will be increasingly doubtful and resentful of the democratic system if we can offer them no prospect and no future in the coming years. That is why we say we must make the democratic system attractive by asking everybody, and in particular the better-off classes, "You had better contribute to the community's coffers to ensure that social justice can be brought about peacefully and constitutionally. If you are not prepared to make those sacrifices, especially you, the well-to-do, then the sacrifices might be imposed on you by other more radical and more vigorous means." The contribution that everyone is making is really a kind of social and political insurance against the wrath of revolutionary violence. The price that we are asked to pay today is not at all oppressive. Nobody has said that the insurance premium, as it were, to ensure that the democratic system survives is all that oppressive. So the Opposition has to make the pretence - they have lately been saying that they have carried out private Gallup polls where the people said that things had gone from bad to worse. Let me say this. If the P.A.P. economic policy succeeds, this is the consolation that I offer them, though they might have to keep up this pretence by saying that things are getting from bad to worse - then the fears which they have been trying to inculcate remain largely a thing of the imagination. But if it fails, then I am afraid that this myth which they have been trying to propagate would become a reality, and pursue them God knows to what nearest lamp-post. Social justice can be brought about only by the well-off classes, so let them be prepared to make the sacrifices. There is no other way. In fact, though the Opposition Members have criticised the Budget, none of them has put forward an alternative to the policy outlined by the Minister for Finance. Therefore, I say that this is a small price that we have to pay for ensuring that the democratic system survives, by making it clear to the majority of the people that it is possible for us to get social justice under this society.

8.50 p.m.

The Prime Minister (Mr Lee Kuan Yew): Mr Speaker, Sir, this is the second Budget debate since the P.A.P. Government took office. May I preface my remarks by the observation that every Assembly, every Chamber, acquires a character of its own? Politically speaking, in the Singapore context, this Chamber is a much more cynical and literate Chamber than the last one. We all make noises here not for the cut and thrust of debate, but for the radio, the newspapers, our friends and supporters outside. We put forward a point of view, whether we believe in it or not; we shoot a line. Perhaps it is inevitable, as a result of the election returns on the night of 31st May, 1959, that this Chamber, consisting of 51 Members who were returned on that day, will go down in the annals of Singapore not as a debating Chamber but as a convenient forum for declamation, telling lies and, in some cases, downright perfidy and untruth; all in the hope that in this vicious rat race for newspaper space, you can get your point across and kill the other chap; to try and convey an image to the public that you are a champion of the people when, in fact, you are no more than just a scamp or a scallywag seeking personal power and glory; or to paint your enemy as a wicked, reactionary and treacherous man who sold out on his promises, either to win support or to deny it to his opponents. All of us know in this respect that we are more sophisticated, including our dear Member for Tanglin. His predecessors umpteen years ago in the Chamber across the street in the Victoria Memorial Hall, to my recollection, were of a different vein. They played up to the gallery in the Chamber and to respect, I think we must face the fact that granted the system of one man one vote, then we are not interested in what the other chap opposite thinks. But the effect is different on the thinking of men away from the Chamber who read two, three or four paragraphs or maybe one headline, or even half a caption. Therefore, Mr Speaker, Sir, while we are trying to maintain the best traditions of the parliamentary system of open encounter in a debating Chamber, let us not delude ourselves that anybody is really seriously interested in making an impression in this House as against making an impression in the country. Therefore, for that reason, the Member for Hong Lim fighting bare-fisted, continued reading his speech. He said he had the figures. I called him many things in many other places, where there was no privilege, without ill result to myself. But Mr Speaker, Sir, when we develop our traditions and the rules of debate, let us remember that if we do not modify and fit them to our circumstances, as the rules of Westminister were fitted for the circumstances of another country, and at a different time, then we shall only let ourselves be made use of for purposes for which this Chamber is never intended.

With those preliminary remarks, Sir, may I go on to say that, although we have become more sophisticated and hard-boiled politically, I do not believe that we have thereby become more adept at working the democratic system of periodic mandates from the people on the basis of one man one vote. For the major premise of the successful operation of that system postulates an intelligent Opposition, intelligent not only in their immediate self-interest but also in their long-term self-interest, the interest of not bringing the House down.

Sir, we have since half-past two this afternoon listened through a series of declamation. I would say that it contributed nothing, not one iota, to the people's understanding of what the Budget meant. The Member for Joo Chiat, with his grievous concern for businessmen, his friends and colleagues who keep on telling that they are losing money and that the world is getting greyer and greyer, had nothing to say. The Member for Geylang Serai was speaking back. I think this must have been a special occasion for him - for he spoke in English today and tried to live up to what he thought one of the leaders of a secondary party in the Opposition should do on such an occasion. And I congratulate him for trying to make the effort and play this role, and keep the system that we want to preserve going and ticking.

Sir, I think the Member for Tanglin could not help himself. He honestly believed - I had a word with him outside; I did not want to interrupt him or make him unhappy - and he said that Hugh Dalton's theory supported him in the belief, that because we cut down the civil servants' allowances, therefore the currency circulation of Singapore, the Federation and Borneo was stagnating at 1,000 odd million dollars and, therefore, that was the reason for the general slump. Had we not cut down the civil servants' salaries, there would have been a boom generated here, in the Federation and in Borneo. I thought he had made a mistake, that he believed the figures given for currency were only confined to Singapore. But he said that, being a meticulous man who carefully read his facts and figures, he knew that they covered the whole of Borneo and the Federation, and he was convinced that the chain reaction-

Mr Thio Chan Bee: On a point of explanation.

The Prime Minister: Yes, surely.

Mr Thio Chan Bee: Sir, I did not want to go into details to explain that there was a slump here. But the prosperity in the Federation and Borneo balanced it up. The circulation was the same. Otherwise, Sir, if there had also been another slump in the Federation, then the position would have been different.

The Prime Minister: We never cease to be surprised in this Chamber by the Member for Tanglin. I did a little bit of elementary economics, and I would like to show him that if money was circulating in the Federation and in Borneo, then prices would have fallen catastrophically because there was a shortage of money in Singapore. I thought he was bemoaning the fact that salaries went down without prices going up. However that may be, I thought it is rather a quixotic gesture his saying, "I will give whatever I get to charity. You know I am resigning, and retiring at the end of this year." This is the sort of thing that gladdens our hearts, to know that we have a generous bighearted Opposition. The leader of the Opposition has been through so many things in the long years since 1948, that I think it is impossible for him now to take a simple straight and upright stand. He is now back with the group that he started with. He started by working with capitalist firms. He was decried by the people, so he resigned-

Mr Speaker: Order. I do not know whether the Prime Minister was in the Chamber when I indicated that I was trying to stop all personalities of that nature. Let us go straight on to the general principles.

The Prime Minister: Indeed, Sir. What I wanted to convey was the tremendous ease with which he could go through the contortions of a complete circle and come back to where he started from - back to the Member for Farrer Park and the Member for Tanglin who were once his political opponents. They now wind up as his political colleagues, friends and mentors. What does he really believe in? He is anti the professional tax. Why? The Member for Farrer Park has given a series of reasons. I am sure the Member for Cairnhill really does not know why, but he has to be anti something. He is anti the professional tax. We have not taxed the poor, so he is against our taxing the professions. He says he supports the income tax increase but not the decrease in the allowances. Then the sly lie that we are more friendly to capital. Sir, we want to create confidence. The hon. Member knows just as well as we do that what we have to face in Singapore all these years is not just to be friends with capital, because that is not going to help the situation. But we have to devise within our limited situation a balance whereby we can convince the workers that in this situation they have the best possible deal; and at the same time, to ensure that the best possible deal for the workers does not kill the goose that lays the golden egg. The hon. Member tried, but he did not succeed in convincing the workers that they got the best possible deal. He convinced the employer. Indeed I suppose the bosses in Tay Koh Yat and Hock Lee were convinced that that was the way, to ensure that business went on. But that is not our way of bringing confidence to people with capital. My postulation is that even if a person with capital had nothing but self-interest at heart, then he would be interested in seeing, not that he alone is given the confidence, and that the worker is kept down, but that both should be, and the system, kept going until such time as there is a major change in the surrounding circumstances. We must ensure that the worker is given a fair deal to his knowledge and to his satisfaction, so that an armed revolt to change the social order never takes place.

Sir, the Member for Farrer Park is, I think, the least hard-boiled of all the Members on the Opposition benches. He has unloaded his conscience of what he believes should be said, and he therefore feels that he has done his job as leader of an Opposition Party by bringing across the point of view which he thinks he represents. May I first dispose of his one major point in the whole speech really relating to this Budget, and that is the professional tax? He says the right to work should never be taxed. Nobody is trying to tax the right to work. Nobody is trying to tell the lawyer, doctor, dentist, accountant, engineer, or structural engineer that he should not work. But we know that in a given social order these self-employable professions are lucrative ones; that if there is an extra million and a bit to be paid, they can well afford to pay it. I say, without any hesitation, that if we are to appreciate that amount of give and take which is necessary to the running of this kind of social order, then we must be prepared not to be dogmatic but to be practical in the circumstances obtaining. We are not talking of a socialist Britain where almost every schoolboy has the right to be a lawyer, doctor, dentist or engineer, because he has a completely free education sustained by the State from the primary school to the university. We have a different social order here. If you want to be a lawyer, doctor, dentist or engineer, then the odds are that you are one of the very few lucky scholars of the State, or you have a father or mother sufficiently wealthy to pay for it. These are privileged professions. You cannot practise as a lawyer unless you are qualified and unless the Bar Committee empowered by the Advocates and Solicitors Ordinance says that you can practise. This is the monopoly we are giving to certain professions. It is the same with the doctors and the dentists. I cannot practise as a dentist by just learning how to drill holes in a tooth and how to pull teeth out. If I do, I will be sent to gaol for breaching the Ordinance governing who can and who cannot practise as a dentist. In this given situation, therefore, we say that these are the group of people fortunately endowed in the present social order to pay the extra bit. The Member for Farrer Park thought that $500 per annum or $125 per quarter - it sounds more drastic - is too much. Sir, he did not say it was too much for him. He was spilling a few tears for those who would come after him. Well, if that is so, then we will wait and see what it is like from the income tax returns, including the returns from the young lawyers, doctors, dentists and so on. We are quite confident that this professional tax is just a flea-bite. If it comes to that, they are the people who have special privileges. In the Supreme Court there is a special Bar room for lawyers to change. It is air-conditioned at the expense of the State. They are not charged for it. And there are lots of other parks. They go to courts which are air-conditioned now in order that they can better discharge their duties. It is the same with the doctors. They have hospitals, ambulances on tap, and laboratories to tell them what particular vaccine is required to kill what particular bacilli. On principle, in this situation, I say this levying of a professional tax is definitely a progressive move. You are getting money from the people who can pay. It would be much easier, of course, for the Minister for Finance to slip in a 10 cent tax on every pair of shoes or umbrella or frying pan. Nobody would feel it. After all, hon. Members opposite will buy one frying pan each probably once in every three or four years. Lots of other people would want to buy frying pans. But we do not want to collect money that way. If this is not socialism, it is at least a little bit of social conscience.

The Member for Farrer Park then went on to make another point. He said a few nice things. Usually it is done by any practised advocate. One says nice things in order that one can destroy. A brilliant group of Ministers, but terribly practical and realistic. Sir, we are accused of having failed because we have not managed the civil service. We have lost the confidence of the people. There is uncertainty in Singapore. There is economic stagnation. The situation is generally depressed. I could not help thinking that we would individually have all been much better off and probably leading happier and less burdensome lives, if we had made a different decision before the elections and had for some reason or other decided not to contest to win. The only consolation I have is that it would not have been as it is today. They never had it so good. Not since 1955 has there been a government which has established confidence in the employers. We are not interested in employers alone, but we are interested in creating a system which is just fair, honest, above-board and likely to endure because it is fair, clean and honest. That makes a big difference to our future. I do not pretend, Sir, that this Government exists for the benefit of keeping employers happy, but if it is necessary in the interests of the people as a whole to ensure that employers are not destroyed or taxed out of existence, then we have the courage to stand up and see that balances are maintained, regardless of what tortured unbalanced minds may try to make out of it.

Sir, eight new taxes were listed by the Minister for Finance. I would have thought that he would have taxed to the limit of human ingenuity, that he would have tried to make out that here was a Government out to tax the poor, not the rich. Property tax and assessment, business registrations, stamp duty, increased assessment on rubber estates, increased rates on private lotteries, fees for the practice of certain professions, passenger tax on embarking air travellers, decrease in the rate of personal allowances on income tax, increase in the maximum rate of tax on personal income, and a special allowance for earned income. Only a tortured and sick mind would try and read into this an attempt to help colonial vested interests, to tax the poor to help the European companies which did not vote us in, and in whom we are not interested. For what earthly ghastly reason? As the odds become more and more difficult for those who have found themselves out on a lonely limb, it is not unlikely that as we go on, more and more fantastic allegations will be made, but not for the purposes of winning support in this debating Chamber, because nobody, Mr Speaker, Sir, with no disrespect to your august position, wants really to win your support. It would be flattering to know that, amongst the many thousands of people outside, Mr Speaker, Sir, there are many who believe that the policy one is expounding is fair and just. One has to be sufficiently cynical to understand that. The play of the system of one man one vote in this given situation leads gradually to a debasement in some cases where integrity of political purpose and principles are lacking, to a complete debasement of everything and anything worth valuing in any society - things such as truth, honesty and decency.

Sir, after one past sitting, I have had occassion to say in no uncertain terms outside this Chamber what I thought of people here who behaved in this way and we had peace and serenity for two sittings thereafter. Our intentions are quite clear. It may be quite possible that in the next few days, you, Sir, will have a much more lively time than you really deserve. We all expect lively debates. In fact, it is part of the play of intellect and wit; or if wit is lacking, then at least some buffoonery to take away the tedium and monotony of the day. But one thing I say: in any wicked and deliberate lies, falsehoods and distortions, people play them with their gloves on, but we play them with our gloves off. In this Chamber, Sir, it is bad to expose knuckle-dusters, but one can use knuckle-dusters all the same, and outside this Chamber we can well look after ourselves.

I am sorry that Members of the House have to waste the time of other Members who have to listen to why hawkers and taxi-drivers are being bled to death by smoking 20 cigarettes a day, and why the people's income tax has increased to $1,000 right up to infinity in the lower range; from never having to pay income tax to paying $5 income tax, and it goes up to infinity. But we have had all this: rural farmers, squalid poverty, taxing the poor for the rich, protecting the interests of the colonialists, gratuitously telling us also how to win the next elections, blueprints for victory, hold snap elections in 1963, get rid of all taxes, give money away, and then we win again.

I am sorry for this, but let me just do a simple A. B. C. on this business of hawkers and taxi-drivers. They are in the public image partly because we made it so. We built it up as an example of the man in the Clapton omnibus. The Member for Hong Lim did not think of it. There were other brains in the Party. The man in the Clapton omnibus was the English idea of the common man. The common man here is your worker in the factory, your hawker, your taxi-driver, your trisha-rider, and I defy anybody, including the Member for Hong Lim, despite the extent to which he can comport his mind, to spell out from this Budget an intention to take one cent from them which they should not pay. Property tax, business tax, stamp duty, increased assessment on rubber estates. Well, if any taxi-driver has a rubber estate, he should pay assessment on it. Rates from private lotteries? He is not a member of the clubs that run these private lotteries and I know of no working men's club that runs this one-armed bandit. Those who run it are usually in the middle income groups. Professional tax, passenger tax-taxi-drivers and trisha-riders going by air to Kuala Lumpur pay an extra dollar. Decrease in rates of income tax-do they pay tax? There is no taxi-driver or trisha-rider or hawker in the income tax books. The Member for Hong Lim ought to know these things, but he has to go back to the taxes which he agreed on to try and spell it out. The 20 cigarettes a day one smoked since 1959; the petrol one used was what he agreed on. Sir, I respect a good opponent. I may not like him but I respect him because he can give you as hard as you can give it to him, but I cannot help despising the perfidious fools-

Mr Speaker: Order. I think the Prime Minister must be aware of the fact that he has been skating on very, very thin ice. The expression "perfidious fools" was obviously directed against the Member for Hong Lim. The Prime Minister must withdraw an unparliamentary expression of that nature.

The Prime Minister: Sir, if only you had given me a chance to proceed, I would have squashed any such qualms in your mind. We have no perfidious people in this Chamber. We are all honourable men here. It is when we get out of this Chamber that we are wicked, perfidious and downright so and so.

Mr Speaker: Order. Nevertheless, I am satisfied that that expression has a direct bearing on the Member for Hong Lim. It ought to be withdrawn.

The Prime Minister: Nevertheless, Mr Speaker, Sir, I think the point I want to make has been made, and that is the point. It does not matter really.

Mr Speaker: Will the Prime Minister withdraw the expression?

The Prime Minister: Yes, surely, Mr Speaker, Sir, but not for the effect on the Speaker. Let us get this very clear, Mr Speaker, Sir, I withdraw unreservedly but I have, with complete cynicism working this system within the Standing Orders, said quietly to the people of Singapore what a lot of decent and I hope right-thinking people believe to be true of even honourable Members of this august Assembly.

Sir, we have to wear our sins round our necks, and the Member for Hong Lim is one of them. We have made very few mistakes, Sir. There were difficulties we did not anticipate running into, and he was one of them. But the Member for Farrer Park is wrong if he believes that here is a Government that does not know how to work the system, including the civil service. Whatever our shortcomings - and there may be many - I am proud to say that my colleagues (not just in the Cabinet), my supporting team of Parliamentary Secretaries and Assemblymen have basic dedication, not selfishness. You will remember some Members in the last Assembly, Sir - Mr Lazarous, Mr Lee Choon Eng and Mr Mak Pak Shee. Sometimes I think we ought to cleanse our past, but whatever our other shortcomings, we have given an honest and effective government; and the business of a government is to govern in the interest of the people. We have come to grips with our problems after 1½ years. We are beginning to produce results. We will continue to press on, and I hope in the coming years, or even in the coming months, even the Member for Farrer Park would find it difficult to say that his is the best. As for the hon. the leader of the Opposition, if he were honest in not wishing to make political mention of the fact that he is in the Opposition, he would say that, knowing the trials and tribulations that the country was faced with, knowing what he had been in for in the last four years from 1955 to 1959, he never expected that there could emerge a government able to maintain the State, to give it coherence and purpose, and to make progress.

9.03 p m.

Dr Goh Keng Swee rose -

Mr Speaker: In reply?

Dr Goh Keng Swee: In reply, Sir. Mr Speaker, Sir, the first day of the debate on the Government financial policy is generally regarded as a field day for the Opposition. This is the opportunity for them to roam far and wide on the proposals contained in the Budget Statement. I cannot help feeling, however, Mr Speaker, Sir, that the Opposition on this occasion have been singularly insipid.

The debate started off with the Member for Joo Chiat who came out with a rollicking big piece of jesting. Here is a man who wants to introduce unemployment insurance, old-age insurance, the restoration of the whole of the variable allowance to the civil service, to increase the pay of the Work Brigade, to set up trade commissions all over the world, including the City of Peking; and yet he is worried about the tax increases that we are introducing. Having delivered his speech, he duly departed from this Chamber, never to return. And this rather lends credence to a report from a reliable source that the Member for Joo Chiat is prepared to resign his seat for a consideration of $20,000.

Mr Speaker: Order. I think the Minister for Finance cannot make that allegation and get away with it. I think he ought to withdraw that allegation.

Dr Goh Keng Swee: I am not quite sure in what way and under what particular ruling of the Standing Orders you consider this statement reprehensible.

Mr Speaker: All I can say is that it is highly improper and I think the Minister ought to withdraw it.

Dr Goh Keng Swee: If you so will it, I withdraw it. I do not want - and time does not permit me - to cover in any detail the points made by the Opposition. I do want at a later stage to deal with some of the statements made by the Member for Hong Lim. But generally, the principal point put forward by Members of the Opposition was to challenge my contention that there has been a solid and substantial economic revival this year. I made my Statement and produced as much evidence as possible by way of statistics of trade, production and finance in support of my contention. On the other hand, the Opposition, on the most dubious of evidence, disputed the fact that any revival has taken place. They cited unnamed business friends of theirs - and there is no doubt that members of the S.P.A. are well related to businessmen - without specifying at all in what trade, in what business and in what form, stagnation has taken place. The Member for Cairnhill attempted to be more specific than the others, and cited the closing down of coffee shops as a true indication of business stagnation. Now, no serious student of economics will pay the slightest attention to evidence of this kind. Only in one respect, however, did the Member for Cairnhill produce evidence in rebuttal, and that is when he challenged my figures of cargo loaded in the Singapore Harbour Board. There is no discrepancy at all between the statement that he read in the newspapers and my remarks in my Budget statement. What he failed to understand was that my figures related to general cargo and did not include mineral oil and vegetable oil in bulk. And quite rightly so, because for the last four or five years, there has been a long-term decline in the quantity of mineral oil, petroleum, crude oil, and bunker oil. The long-term decline in that trade in Singapore has nothing to do with the internal conditions in Singapore. It is just due to a general over-supply in the oil industry, fiercer competition, and installation of oil supply points in various ports of the world. Excluding this declining element of oil, my figures, as I said, did indicate a fairly substantial increase in both volume and value of trade.

There is a general point made, too, that the P.A.P. economic policy has differed from the policies enunciated before the general elections. Mr Speaker, Sir, if you will recall, I went to great lengths to explain that our present policies are absolutely consistent with the policies we declared to the electorate and the general public before the elections. I will return to this point later.

I said sometime ago that I intended to spend some time dealing with some statements made by the Member for Hong Lim. Mr Speaker, Sir, that hon. Member has been called various names and epithets which may not be repeated in this Chamber. You will recall, Sir, that after a sitting of this Assembly two months ago, the Prime Minister called the Member for Hong Lim a liar and a rogue. In the course of proceedings in a Press conference following that, my colleague, the Minister for Labour, added in another term "coward". Now, Sir, in Biblical times, there was a legendary character named Beelzebub, who was known as the prince of liars. And, of course, lying has been a human failing from time immemorial. In more recent days, however, this has been reduced to both an art and an exact science.

Mr Speaker: Order. I think the Minister for Finance is attempting quite skilfully to get round the Standing Orders, but I would suggest that he now concentrate on what has been said about the general principles of the Government policy.

Dr Goh Keng Swee: As you quite rightly say, Sir, I have to tread rather warily over this ground, but this is by way of introduction to explain just that form of prevarication contained in the statement of the Member for Hong Lim.

Mr Speaker: I think the word "prevarication" used of a statement of a Member of the House is not parliamentary.

Dr Goh Keng Swee: I withdraw, Sir, if that is the rule of the game. Speaking more broadly, I was about to develop the theme that there are two types of lying. One is what Dr Goebbels said, that is, to repeat a big lie and do it persistently, eventually making the general public believe in it. The other is what we have seen more recently in the case of Senator McCarthy, who did not believe in hammering home a big lie, but in spreading a lot of little lies, which add up then to a big smear. The Member for Hong Lim, I would say, is no Dr Goebbels and the various mis-statements of fact and distortion of opinion contained in his statement make one believe that he is a supporter of the McCarthy school. Now, Sir, if we were not restricted by Standing Orders, I would have come straight to the point and said that I want to talk about his whopping downright big lies. But the rules of the debate being what they are, I will merely say that I will deal with a number of terminological inexactitudes indulged in by the Member for Hong Lim.

We have to deal with matters of principle, but I think it is necessary to show the Member for Hong Lim as a man who is extremely reckless, extremely blatant and unashamed when it comes to distinguishing truth from falsehood, facts from illusion.

Sir, may I now come to the ten items? I will have to go through them very quickly.

1. The Member for Hong Lim said that the big European firms here make at least half of the profits earned in Singapore. There was no evidence whatsoever, although he assured us that he had spent a week in making his calculations. If he refers to the 1958 Annual Report of the Income Tax Department, he will find that profits made in Singapore amount to $375 million. He produced a book of sharebrokers and gave details of profits of the biggest European firms. My recollection is that the total profits do not exceed $7 million. I am not here to defend the proposition whether European firms should or should not make money. The point is that he made that statement and that it was inaccurate.

2. The Member said that he saved the civil servants in the lower grades from pay cuts. I deny this most categorically. I had no assistance and no advice at all from him.

3. He said that a 5 per cent increase in tax on incomes of $10,000 a year would yield little by way of additional tax. This is completely untrue. We expect this increase to yield an additional tax of $1 million per year or more than the whole increase from new taxpayers brought into the tax orbit.

4. Inexactitude No. 4. He said that Shell Company pays no tax on profits in Pulau Bukom. That was a definite statement and he challenged me to deny it. Sir, the Member was formerly the Minister for National Development, under whose charge the assessment of properties is allotted. An ordinary man will say that he knows what the facts are. And the facts are that Shell Company is paying tax on the profits in Pulau Bukom at the rates applicable to that section in the rural areas. It is true that when he was the Minister for National Development, he tried to increase the amount of assessment that Shell Company was paying - a very worthy effort. Unfortunately, this led to no result at all because he had chased away all the officers from his Assessment Office.

Mr Ong Eng Guan: On a point of clarification, Mr Speaker, Sir.

Dr Goh Keng Swee: Time does not permit me, Sir.

Mr Ong Eng Guan: Could I ask the Minister -

Mr Speaker: Order. The Minister is not giving way.

Dr Goh Keng Swee: No. 5, Sir. He said that the Public Works Standing Committee was an innovation introduced by this Government to embarrass him. The Public Works Standing Committee is a long-standing institution and allowed for under General Orders. There is nothing at all -

Mr Ong Eng Guan: On a point of clarification again, Sir.

Mr Speaker: If the Member will give way.

Dr Goh Keng Swee: No. Then No. 6. These are minor - I cannot use a four-letter English word - inexactitudes. He said that the Cabinet Estimates Committee was not responsible to the Cabinet. That is absolutely untrue. He made some statements regarding the incidence of taxation - that taxi drivers woud have to pay so many million dollars, trishaw riders so many million dollars, and so on and so forth. There was no explanation of how the calculations were made. Where were the data? None whatsoever. The Prime Minister has already disposed of this point and I will press on to the next one. In the opinion of the Member for Hong Lim, tax increases were unnecessary, having regard to the amount of additional tax, namely, $45 million, because we could have saved that amount of money by pruning expenditure. And he even went to the extent of quoting from an election campaign statement of the Party saying that this is what we shall do. I was looking forward to some suggestions from the Member for Hong Lim as to how we could save an expenditure of this magnitude from the public fund. Indeed, if he had made any proposals, we would have listened to them with interest. But having said that he would save $45 million in the Expenditure Estimates, he did not specify even one item - not a single one.

Finally, Mr Speaker, he said that companies do not pay tax, and when my colleague, the Minister for Education, sought clarification on that, he confirmed that that was the case. It seems to me absolutely appalling that a person, whose profession is accountancy, could have made this most elementary blunder. Sir, a week's calculation -

Mr Ong Eng Guan rose -

Mr Speaker: Is it on a point of clarification?

Mr Ong Eng Guan: On a point of order, Sir.

Mr Speaker: Point of order.

Mr Ong Eng Guan: Mr Speaker, Sir, the Minister for Finance has just now touched on my professional capacity, but he has not substantiated my charge that at present our company tax is not the company tax we know of in the United States, Australia or India, and that -

Mr Speaker: Order. That is not a point of order. Dr Goh.

Dr Goh Keng Swee: I did not elaborate on that, Mr Speaker, Sir, because my colleague, the Minister for Education, had already explained that at great length, and during his explanation the Member for Hong Lim was probably not present.

Now the proposal, Mr Speaker, Sir, a 10 per cent company tax without allowing - if I understand him right - a set-off in respect of dividends. At present the company tax is 40 per cent and the money so paid can be used as a set-off against dividends distributed. But if the company does not distribute the whole of its profits, then the company itself, as an economic entity, will have to pay tax on the undistributed profits.

Mr Ong Eng Guan: On a point of clarification, Mr Speaker, Sir.

Mr Speaker: Does the Minister give way?

Dr Goh Keng Swee: I have only ten minutes to wind up.

Mr Speaker: The Minister does not give way.

Dr Goh Keng Swee: Indeed, in modern business, almost all public companies plough back a substantial part of their gross profits into their business. No studies have been made here, to my knowledge, of the exact percentage of profits that have been ploughed back. But obviously under the present arrangements, if public companies were to keep back one-quarter of their gross profits and not distribute them as dividends, then the yield from tax would be the same as under the present tax arrangement. That is a matter of simple arithmetic. But if more than a quarter of the gross profits are retained, then this new tax proposal will have a smaller yield than the present arrangement. And if I were to hazard a guess as to the proportion of gross profits retained in businesses, I would say that it would be nearer half than one-quarter, taking all the companies as a group.

Then there is the bright proposal to tax military vehicles. This has a rather long history. The implication here seems to be that the Government does not receive any payment from the Defence Department of the U.K. Government in respect of property, vehicles and other things owned and run by the War Department. This is not quite true. They are paying a sum of $900,000 a year in lieu of the payment of rates on their property. We have not agreed that this amount is a fair and equitable compensation. But the point is that payment is being made. When the Member for Hong Lim was the Minister for National Development, we protested strongly against the inadequacy of this contribution, and he accordingly undertook to reassess all Service properties with a view to increasing this contribution - a praiseworthy undertaking. I remember distinctly that I gave him four months to let me have details of the revaluation of Service properties. But he was quite unable to produce it.

Mr Ong Eng Guan: On a point of information, Mr Speaker, Sir.

Mr Speaker: If the Minister will give way.

Dr Goh Keng Swee: No.

Mr Speaker: The Minister does not give way.

Dr Goh Keng Swee: It was quite beyond his means, for the same reason that he had chased out all his technical staff.

Sir, may I be permitted, in the short time at my disposal, to bring to perspective the Budget proposals? As I have said, this cannot be considered as a one-year attempt in isolation. We must see it in the economic setting we find ourselves today - a tremendous population growth with its inevitable increase in the numbers of young men and women looking for work every year. With political changes, there is a need not only to create more jobs for the growing population, but also to bring about more social justice. All this means getting money. Money, first, to finance development expenditure so that we can make it easier and more certain that new industries will be established in Singapore, both by local businessmen and overseas businessmen, or by joint participation between themselves. Then, on the other hand, we have to provide for improved social services, more schools, more assistance to those who do not have regular incomes - assistance in the way of public assistance, unemployment relief schemes and so forth. In order to get this extra money, we have to decide from which sectors of the economy the money must come from, and who are the type of people to pay for this. It is very clear from the nature of the new tax proposals that the general principle is to spread the burden as broadly as possible amongst those who can afford to pay. Hence, people such as shopkeepers, lawyers, doctors, engineers, landlords, people who travel by air, limited companies, and so forth have been called upon to make a small extra contribution to the general welfare. The amounts are well within their capacity to pay. To represent the Budget as soaking the poor to pay for the rich is such a travesty of the truth that it is hardly necessary for me to rebut it.

I wish to conclude with some observations as to the general problem that is facing us and the solutions that are available to us. Let us never assume that the difficulties ahead are going to be easily disposed of without effort and sacrifice by large numbers of people. I have referred in my Budget statement to the fact that all Asian countries try to create material prosperity for their subjects. But few people are aware that this is going to be a long and harsh journey. What I have tried to explain in my Budget statement is that we must take a longer perspective, and within the development plan, try to form a framework of our period 1961 to 1964. But even this period itself, with all the money and the resources that we intend to put in development, represent but the first step in a very long journey. But this I can say with confidence. In taking this step, we have a Government that is in sound condition and a country in good heart.

Question put, and agreed to.

Resolved,

That the Assembly approves the financial policy of the Government for the year 1961.