ANNUAL BUDGET STATEMENT

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I beg to move,

That the Assembly approves the financial policy of the Government for the year 1962. [Interruption].

Mr Speaker: Order.

Dr Goh Keng Swee: When moving this motion last year, I said in my introductory remarks "the background against which this Budget is being presented is markedly different from that a year ago". This year, this holds only too true and with greater force. For we now stand on the threshold of a new independence, reunited with the Federation of Malaya. It is hardly necessary for me to labour this point, as the House is in the midst of a debate on the merger proposals.

Merger is the dominant issue before the whole country today. When such momentous issues are being debated both in the Assembly and outside, it is almost with diffidence that I, as Finance Minister, enter the arena to draw attention to such mundane affairs as the Budget. Nevertheless, Sir, life must go on. Provision must be made for the running of the public service next year. Perhaps it is a gracious Providence that has ordained that the Budget should be introduced in the midst of the debate on merger. For there are already signs that some Members of the Assembly in the Opposition Benches have allowed their imaginations to soar into space, right into the realms of wild fantasy. Before their minds circle permanently in orbit in outer space, it is good that they be brought back to earth to face the realities of life.

Far be it from me to deliver a sermon to the Barisan Sosialis on the hard economic facts of life, nevertheless, I think that a few timely reminders will not be out of place, if only to bring home the point that while political excitement and euphoria may be a pleasant pastime for amateur politicians, there is, for more practical people, the task of seeing that our economy continues to function and that the livelihood of people be thereby ensured.

We in Singapore live in a tight economic situation. We are a small island State which is prosperous because of our central geographical position. This allows us to render services of value to our neighbours. Through the port of Singapore passes much of the produce of the Federation of Malaya, Indonesia and Borneo. In addition, we serve as a supply base for the consumer goods which these territories need. This is the main source of our livelihood. We will continue to earn this livelihood so long as we provide these services efficiently and so long as we are on good terms with our neighbours. But when neither of these things obtains, then this principal source of our livelihood may shrivel. And this will bring in its train poverty and destitution for us.

Whatever our differences in political outlook may be we must refrain from such action that would lead to the ruin of our country through hostility of our neighbours or the running down of our business organisations. Political slogans and political ideology cannot feed empty stomachs.

In the background of the current political situation, the only possible Budget that a Finance Minister can present to the House is one that sees few innovations, while maintaining the public services much in their present form with some scope for modest expansion. This, in fact, is the Budget which I am privileged to present to the House today. For, with merger around the corner, there will be innumerable matters which will need the attention of the Government and the Central Government of the new Federation. There will be many anomalies and budgetary adjustments to be made between State and Central Governments, and at this stage it is unwise to enter into new lines of action.

This does not mean, however, that the plan for our economic expansion should be halted or even retarded. The policy iii this respect is stated clearly in the speech of the Yang di-Pertuan Negara. And I quote:

'For the immediate future, the task of the Government is to proceed with the work already initiated.'

Before I discuss the Estimates now before the House, I shall, in line with past practice, turn to a review of the current year.

Review, of 1961

The year 1961 was an eventful one. Several new financial and economic measures were successfully introduced. Others initiated by the P.A.P. Government in previous years came to fruition during this period. I wish to deal briefly with some of the more important of these financial and economic measures.

Quite the most important event of the year was the publication of the Four-Year Development Plan. The Development Plan sets out the targets in economic and social development which the State should achieve in the period 1961-1964. The principal objective of the Plan is to increase the rate of capital formation from its present level of about 11 per cent of the national income to something nearer 20 per cent. This is to ensure an expansion of the economy sufficient to keep pace with population growth and to leave aside something for the improvement of standards of living. The Plan also calculates the available resources, both internal and abroad, to carry out the Programme. The Plan provides for capital investment in the public sector, that is to say, capital investment by Government and statutory authorities. By the nature of things, it cannot and does not set out targets to be achieved by private investment, though one of the main objectives of the Plan is to induce an increase in the rate of private capital investment. The Development Plan was conceived against the background of a severe unemployment problem which threatened to increase to unmanageable proportions if no positive effort was taken. I will at a later stage give details of the performance of the Plan in the current year.

Another measure of great importance, which was taken by the Government, was to set up the Economic Develop. ment Board on 1st August, 1961. An Ordinance setting out the powers and functions of the Board was approved by the Assembly on 24th May, 1961. It has taken the P.A.P. Government some two years to launch the Economic Development Board. In this period, we had access to expert opinion at the highest level, including the World Bank and the United Nations Special Missions. The Board has started its work, recruited personnel, and got down to business, I shall deal with the work of the Board later in my statement.

I have mentioned in previous Budget statements that we would be approaching the World Bank for Development loans. Members will be glad to learn that the World Bank has agreed in principle to negotiate loans for projects in the Four-Year Development Plan. At present, two projects are under consideration, namely, the expansion of water and power supplies. It is a source of satisfaction to the Government that the World Bank has agreed to finance our development projects, for a World Bank loan indicates the confidence of the Bank in the financial standing of the Government.

The year 1961 also saw the conclusion of the work undertaken by two United Nations Special Missions despatched to Singapore. One Mission, headed by Dr A. Winsemius, studied the general problem of industrialisation of Singapore. In addition, the Mission made recommendations in respect of the establishment of specific new industries. The responsibility for implementing the findings of this report rests with the Economic Development Board.

The other United Nations Mission, headed by Mr P. L. Schereschewsky, examined the feasibility of a steel industry in Singapore. The Government is acting on its recommendation that a small rolling mill should be set up as a first step. We have been successful in persuading a group of local businessmen to pool their resources to establish this steel plant which will be sited in Jurong. They have held negotiations with one of the major Japanese Steel companies over their participation in this project. No agreement was reached, however, though the door was left open for future participation in a more substantial project, should this prove feasible.

Another event of significance was the conclusion of the agreement on basic arrangements in regard to trade between the Governments of Singapore and the Republic of Indonesia. In consequences of this agreement, the Office of the Singapore Trade and Cultural Representative was established in Djakarta this year. Another agreement entered into with a foreign Government was the Agreement on the Avoidance of Double Taxation which was ratified by the Governments of Singapore and Japan in September this year.

In February this year, the Government decided to offer Treasury Bills to the public on tender. These bills were issued under the authority of the Local Treasury Bill Ordinance. The value of Treasury Bills now outstanding is $12 million issued on tender, and $5.3 million issues on tap, making a total of just over $17 million. Treasury Bills provide a safe and liquid form of short-term investment. They are useful to banks and other concerns which may have surplus cash balances seeking investment of a fairly liquid form. There is considerable scope for expansion of the short-term money market.

A loan of $50 million bearing an interest of 5¾ per cent redeemable in 20 years was floated on 27th September, 1961, all of which was taken up. This loan will be a useful addition to the resources of our Development Fund.

Now to turn to the general economic picture of the State. The value of Singapore's trade in 1961 has not been as large as that of the previous year. For the first three-quarters of 1961, the value of our total trade amounted to $5,473 million as compared with $5,700 million last year. Our imports fell by $72 million and, more seriously, our exports by $155 million. Our two major trade partners are the Federation of Malaya and Indonesia, and in respect of both, there has been a slight decrease in value. Our exports to Indonesia, however, have shown a small but welcome increase from an average of $10 million per month in 1960 to nearly $13 million per month in 1961. This improvement reflects better relations between the two countries. The principal reason for the decline in trade values is the fall in the price of rubber. Our trade in rubber accounts for a third of our total imports and nearly half of our exports. Therefore, small variations in the price of rubber will have a significant effect on our trade values.

Last year, 1960, was a good year for rubber, the average price for R.S.S. 1 being $1.08 cts. Since October 1960, however, the price of rubber began to drop. During 1961 this drop continued slowly but steadily with average prices being between 90 and 82 cents. Recently the price is around 75 cents above.

The effect on Singapore so far has not been very substantial. As far as the activities of our port transport communications and business houses are concerned, it is the volume of trade rather than the value which determines how well off we are. In this respect, the position is happier. Total tonnage of cargo handled showed a slight improvement in 1961 as compared with last year. In the period January to August 1960, just over 6 million tons of cargo was discharged and 3.4 million tons loaded. This year the corresponding figures have risen to 7.5 million tons discharged and 4.2 million tons loaded. The volume of cargo handled by the Singapore Harbour Board alone has shown an increase from a monthly turnover of 396,000 tons to 533,000 tons. Again during the same period, the number of ships which were cleared by our Port rose from 12,933 to 13,751. In terms of total registered tons, there was an increase from 43 million tons to 47.5 million tons. On the whole, the volume of trade was high this year and the capacity for handling this volume was fully employed. Nevertheless, the decline in the price of rubber is bound adversely to affect the earning power of our neighbours. They in turn will buy less goods and this may reduce the volume of trade passing through Singapore unless there is a revival in the price of rubber.

The general trend of economic activity in the State for the past year is also reflected in the volume of financial transactions and changes in levels of industrial production and constructional activity. Loans and advances made by banks increased from $569.5 million last September to $666.4 million September this year.

The upward trend of manufacturing activity which I brought to your notice in my last Budget speech may be seen to continue into this year. This is reflected in the increase of production of main industries. The cigarette industry has shown an increase of nearly 25 per cent for the first eight months of this year as compared with the corresponding period of last year. Output rose from 2,455,000 pounds to 3,062,000 pounds. Other industries which showed a significant increase in production are coconut oil (17 per cent), sago flour (14 per cent), soft drinks (17 per cent) and remilling of rubber (40 per cent). How, ever, the production of biscuits, soap and soya bean sauce declined slightly.

The construction industry saw heightened activity generated by the massive building programme of the Housing and Development Board and the revival of private building activity with the favourable change of policy towards development charges for main City Council services. This is reflected in the increases in our retained imports of building materials. Imports of cement increased by 40 per cent in the first nine months of this year. Imports of steel and other constructional materials have also shown an equally substantial increase.

With economic expansion, consumption of textiles and durable goods have shown a corresponding rise for the period under review. Retained imports of radio and refrigerators increased by about 30 per cent while new registration of private cars, motor-cycles, and scooters increased by 35 per cent. Textiles retained for the first six months showed a substantial increase over the corresponding period last year. So far as statistical evidence is available, more goods were generally consumed this year compared with the last.

The prospects for the coming year are not unhopeful. The American economy has recovered from the recession of last year and it appears set for further advance. Similarly, the economic expansion of industrial nations, which slowed down in a number of countries last year, is likely to register a general advance.

Revenue and Expenditure 1961

I now turn to a review of expenditure and revenue in 1961. Expenditure was estimated at $348.3 million. For the first ten months of the year, actual expenditure amounted to $246.7 million. It is not easy to forecast what the final figure would be, because most of the bills for the purchase of equipment under O.C.S.E. Heads and works started in the year will be paid in the last quarter of the year. It is likely, however, that Expenditure will fall short of the Estimates by some $30 million. I dealt last year with the reasons why expenditure of that year was not expected to reach the levels estimated. The familiar reasons were that of difficulty in recruitment of staff and delays in the fulfilment of orders by suppliers. This year, however, a new factor arose, and this is that some of the previous City Council Departments now integrated into the Government Departments have overestimated their requirements. This will be made clear when I discuss Heads of Expenditure.

As regards Heads of Expenditure where there has been substantial under-expenditure, Public Works Recurrent shows that some $4 million will not be spent principally because of the lack of engineers and architects to supervise maintenance and construction work. We are making every effort to bring the establishment of the Public Works Department to full strength, but there are still deficiencies in the senior and medium grades. Further, there has been an over-provision in respect of the Transport Centre taken over from to City Council.

As regards the Ministry of Health, under-expenditure has been less than that of previous years. The Ministry of Health is likely to spend some $3.7 million less than the Estimates, and this is principally due to unfilled posts in the senior and ancillary grades. The Government has made certain improvements in the conditions of service of nursing and other ancillary staff. I hope that with these improvements we shall be able to fill most of the vacant posts.

The Ministry of Finance is expected to spend some $3 million less than the Estimates. This is principally due to the fact that an Advance Account of $2 million provided for in the Estimates to pay for forward purchases of materials and stores by the City Engineer's Department was not drawn upon. There have also been stricter controls over payments of passages and miscellaneous travelling expenses. Some $2.4 million will not be spent under Charge on Account of the Public Debt, because the total amount of borrowing by the Government did not reach the level estimated. The Ministry of Labour will probably spend $900,000 short of the estimated expenditure. This is principally due to under-expenditure on Work Brigade projects. The Police will spend some $900,000 less than estimated. There is difficulty in recruiting constables with the qualifications and standards set down. Some reorganisation has taken place, as a result of which certain static or non-operational duties have been regarded as Guard Constables for which lower standards may be accepted. Recruitment to this group is proceeding satisfactorily. The Ministry of Education will under-spend by roughly $4.6 million. This is due to more careful administration of Grants-in-Aid. There is also the perennial problem of getting sufficient numbers of suitably qualified personnel.

The 1961 revenue position is satisfactory. The yield from most of the main items of revenue exceeded expectations. 1960 by all accounts must have been a good business year, for the yield from Income Tax surpassed the estimated amount of $75 million by $5 million. The estimate for Property Tax of $31.6 million is likely to be exceeded by $12.5 million. This is mainly due to improvements in collection procedures. Totalisator and Sweepstakes duties did not fulfil the optimistic expectations of $8 million. The yield will be about $2.8 million less than the Estimates.

Customs and Excise revenue was buoyant. The total revenue collected from the Customs Department during the first ten months of the year was $95.4 million or $3 million more than the revenue collected last year for the same period. The total Customs revenue is expected to reach $116 million.

Liquor duties will probably exceed the estimated $23.1 million by $3 million. Consumption of liquor of all grades had been maintained throughout the year at a high level. The Tobacco revenue, which in recent years had given rise to anxiety, will for once exceed the estimate. The figure of $38.5 million may be passed by some $3 million. On the other hand, Petroleum has proved a disappointment. Once again, there is a short-fall, this time probably in the region of $1.3 million. There has been a switch from petroleum engines to diesel engines to power vehicles. However, the yield of the special tax on heavy oil engine vehicles has more than offset the short-fall in Petroleum revenue. Entertainment Duty may just fail to reach the estimated $7.7 million.

The second instalment of $10 million of the $30 million loan repayment by the Federation of Malaya was made this year. The United Kingdom Government made a contribution of $4.28 million towards the maintenance of the Local Defence Forces. City Council integration

Sir, before I comment on the Estimates now before the House, I wish to dwell at some length on the progress made on the integration of the City Council departments into the Government. This is a major administrative reform undertaken by the P.A.P. Government. I wish to say also something about the next stage in this process of integration, which would be the setting up of the Public Utilities Board to take over the Trading departments of the City Council. This year's estimates is the first exercise at integrating the Budgets of the Government and certain City Council departments. I have dwelt at some length last year on the intricate nature of this exercise. The work of integration was carried on more smoothly than was thought possible last year. In spite of the different systems of accounting procedure, the management of this integrated Budget carried on smoothly and without any major upset. The volume of work handled at the Accountant-General's Office has increased by about a third. The staff of the office had to be supplemented with one Accountant and sixteen subordinate staff. The next stage of integration would be to set up the Public Utilities Board and I shall deal with some of the problems that this will raise, as these are matters of widespread public interest.

The City Council has hitherto been divided into two main parts, the Rate Fund Departments and the Trading Departments. The Rate Fund Departments, which include sewerage, cleansing and many other departments, were financed from rates paid by ratepayers under the Local Government Ordinance, 1957. The Trading departments are the water, gas and electricity departments, and they derive their revenues from the consumers of water, gas and electricity. The intention is to constitute the Trading departments, with the necessary administrative staff, as a Public Utilities Board. The Rate Fund Departments are to be integrated or merged with the existing Ministries of the Government. The personnel and equipment of the Rate Fund Departments have already been transferred physically to Government Ministries and are now operating under the control of those Ministries. This, the so-called physical integration, began on the 1st January this year, and is, for all practical purposes, completed. In addition, the revenues formerly received by those Rate Fund Departments have been paid to the Government since 1st January, 1961, and their expenditure has been paid by the Government from the same date in accordance with the Local Government (Financial Integration) Ordinance, 1960. The personnel and equipment of the Trading departments, and the associated administrative staff, will remain with the City Council, and their revenues and expenditure are still accounted for by the City Council. Standing outside and apart from the Rate Fund and the Trading Departments are the Municipal Provident Fund and the public loans raised by the City Council. These two accounts serve both the Rate Fund Departments and the Trading departments and are still being maintained by the City Council as a common service to all departments, including those that have been integrated with the Government.

The taking-over of the revenues of the Rate Fund Departments by the Government requires only one minor adjustment. It relates to the collection of fees for sewerage and other sanitary services. These services are at present billed in different ways in the city and in the rural areas, but as from 1st January next a uniform system of billing is to be introduced. From that date, the occupiers of all houses throughout the island will find that the familiar consolidated accounts rendered every month by the City Council will be slightly changed and some people in the city area will find that they are billed for certain sanitary services by the Ministry of Health and no longer by the City Council.

It has been decided that the administration of the Municipal Provident Fund shall be taken over by the Government and administered in the common interests of the Government, the Housing and Development Board, and the new Public Utilities Board. It has also been decided that the public loans and sinking funds of the City Council shall be taken over by the new Public Utilities Board and that the relatively small liability of the Government for these loans shall be discharged by, regular contributions from the Government to the new Board.

It remains to deal with the assets in cash and property of the City Council. These assets have a book value of over $600,000,000. They are to be apportioned between the Government and the new Public Utilities Board; the power stations, water works and other assets of the Trading Departments going to the Board and the roads, sewers, fire engines and other assets of the Rate Fund Departments going to the Government. For various technical reasons, it has been decided that the most convenient date on which the apportionment is to take place is 1st January, 1961, and the Government will assume the ownership of its portion with effect from that date. The portion which goes to the new Board will be handed over to it when it is set up. The liabilities of the Rate Fund Departments will likewise be assumed by the Government and those of the Trading Departments by the new Board.

A few minor adjustments are to be made for the convenience of administration. The public street lamps and stand-pipes of Singapore which are owned by the Trading departments will be handed over to the Government with, of course, the associated liability to maintain them. Certain houses and buildings which are the property of the Rate Fund Departments will be handed over to the new Board in order that it may be properly equipped to carry on its functions economically in the interests of consumers of water, gas and electricity. It will be seen that although it is relatively easy to give general directions for carrying out these intentions, an immense amount of work will have to be done in sorting out the assets and liabilities of the City Council acquired over the last 100 years.

Turning now to the problems of the personnel of the City Council, I should first explain that there are about 2,600 monthly-rated employees in the Rate Fund Departments and, on integration with Government Ministries, they join up with about 29,000 monthly-rated Government employees. It has been decided that every permanently engaged monthly-rated City Council employee shall retain his present salary and salary scale on his transfer to the Government service. In addition, all of them who are members of the Municipal Provident Fund will be allowed to remain members of that Fund and will, on their retirement, be entitled to receive the full benefits of that Fund calculated on .the basic salary drawn in the Government service. There are many problems connected with their transfer the details of which are being worked out grade by grade and, in some cases, individual by individual. The general intention is that the entry of these monthly-rated employees of the City Council into the Government service should not result in displacement or impaired prospects either for themselves or for the Government employees they join.

As I have explained, the physical integration of the Rate Fund departments with Government is complete. Those departments have now become merged with the Government. What remains of the City Council is that part of its former self which is to become the Public Utilities Board. Legislative sanction to carry out the final acts of formally transferring assets, liabilities and employees will be sought in two Bills. The one is the Local Government Integration Bill which will deal with the transfers to the Government as well as with the manifold powers and duties carried out by the Rate Fund departments. The other Bill is the Public Utilities Bill which will establish the new Public Utilities Board. Certain other minor Bills will also be introduced to bring about consequential amendments to the pensions laws and the constitution of the Housing and Development Board.

Expenditure Estimates, 1962

I now discuss the 1962 Estimates. As I said in my introductory remarks, the Budget for 1962 is designed to maintain existing provisions, making allowances for normal expansion. The only new service that will be introduced next year is the Television service which I shall discuss later. Other than this, all increases of expenditure are due to normal expansion. The expansion of the social services to keep pace with demand is a substantial one. Education and health between them account for $25 million additional expenditure. The growth of expenditure on education has been striking in the past ten years. In 1951 the annual vote on education was only $12.4 million. Next year the amount will be $89.1 million, a sevenfold increase in 11 years. We in Singapore have reached the stage where it is possible to provide free education for every child up to primary stage. I have, in my first Budget statement, drawn attention to the mounting cost of education. Every loyal citizen wants the State to maintain the highest possible standards of education as well as to ensure its widest possible extension. So far, we have been fortunate that we have sufficient resources to satisfy this wish. As for the future, whether Singapore will be able to do so depends on whether or not we succeed in expanding our national income fast enough. If everyone makes his full contribution to this end, I think we can make the grade.

As regards particular Heads of Expenditure, the principal increases in expenditure occur under the Ministry of National Development ($6.5 million), Ministry of Health and Law ($6.1 million), Charge on Account of Public Debt ($5.9 million), Ministry of Culture ($2.15 million), Defence Services ($1.5 million), and Ministry of Education ($20.98 million).

The large increase in the provision of the Ministry of National Development is due to a change in the Budget. The votes for the Work Brigade have been transferred from the Ministry of Labour to the Ministry of National Development. This has been done for organisational reasons since the Ministry of National Development is concerned with most of the Work Brigade projects.

The increase under Charge on Account of Public Debt is to meet loan charges in respect of the 1961 Loan and that part of Government's liability in relation to City Council loans consequent on integration of certain City Council departments into the Government.

To facilitate administration, the Head "Ministry of Health" has now been reorganised under three Heads: Ministry of Health and Law, Hospitals Division, and Public Health Division. City Health has been incorporated into the Public Health Division. The expansion of medical and health services has necessitated an increase of staff at all levels. Maintenance costs have necessarily risen. The increase is also due to the absorption of provisions for water supplies from stand-pipes in rural areas and rural cleansing and scavenging services previously shown under Rural Administration.

The increase in the provision for the Ministry of Culture is due to the incorporation under this Head of Victoria Theatre and Memorial Hall (previously shown separately). There has been also expansion in the activities of that Ministry. Members will recall voting supplementary provision this year from Suara Singapura and the Dewan Bahasa dan Kebudayaan Kebangsaan. These have now gone into full swing. Provision has also been entered for engineering and technical staff for a television service. Plans for this service have reached an advanced stage, and I expect that the new service will be inaugurated by the end of 1962.

The provision for Defence Services for 1961 was based on a standstill budget pending the outcome of financial talks with the British Government. Now that the extent of the contribution which the British Government is prepared to make has been ascertained, it is possible to have a realistic budget for Defence Services. Recruitment, repairs, replacements of equipment, and so on which were previously deferred, could now proceed.

There is the large increase under the Ministry of Education. With the increase in educational facilities, additional staff and non-teaching staff (to maintain school compounds, buildings and so on) will be required. There will be the consequential increase in equipment and consumption of water and light. Also a large element of the increase is occasioned by the contribution to the University of Singapore. The sum is $8.5 million, of which $4.0 million is recoverable from the Federation Government in respect of Federation students. There is also an increase in the number of bursaries to students. Further, earlier this year, the Lembaga Gerakan Pelajaran Dewasa extended its activities substantially by introducing further education classes which have proved to be well supported. To meet this additional commitment as well as its regular expansion, the contribution to the Lembaga is now increased from $500,000 to $1,019,400. Finally the total under the Ministry of Education has been increased by a sum of $1,997,400 in respect of "Contribution to the Polytechnic". In this year's Estimates the contribution to the Polytechnic is shown under the Head, Contributions and Charitable Allowances, a practice not in keeping with the dignity of that institution.

With regard to housing, the terms of a subsidy to the Housing Board are being discussed, and I expect that these will be settled next year. Provision for this will be applied for in a supplementary estimate in the course of 1962. In the meantime, substantial sums have been provided both in this year's and next year's Development Estimates to finance the Board by way of loans. Thus, 1962 will be another year in which the expansion of social services is kept up. Revenue Estimates, 1962

The favourable trend in revenue collections is expected to continue into 1962. The 1962 estimate ($391.1 million) is $46.3 million more than the 1961 estimate ($344.8 million). The yield from Income Tax is expected to exceed the 1961 estimate of $75 million by $5 million. Property Tax will yield $14.4 million more than the 1961 estimate of $31.6 million. Receipts from Tobacco Duties are also expected to exceed the 1961 estimates by $3 million, based on the trend of consumption at present. Liquor Duties are expected to increase from $23.1 million estimated for 1961 to $26.0 million. Stamp and Estate Duties are estimated to yield $0.3 million and $1.3 million respectively more than the 1961 estimates of $3.6 million and $3.2 million. Further, increases are expected in respect of Postal Receipts and Telecommunications Receipts, Motor Vehicles Taxes, Rents and Interests and Singapore's share of the Currency Profits. There are also increases in the small items which are too numerous to detail. But two large new items appear in next year's Estimates. The first is Reimbursement by the Federation Government of part of the Singapore Government's contribution to the University of Singapore, being its contribution to cover Federation students studying at the University. This amounts to $4 million, and is a per-contra item against the expenditure vote of $8.5 million shown under the Expenditure Estimates of the Ministry of Education. The other is the Contribution by the U.K. Government towards the cost of Local Defence Services. This amounts to $4.7 million. Now for the decreases. The falling trend in the collection of Petroleum Duties is reflected in the decrease of $2 million shown in the 1962 estimate against the 1961 estimate of $38.5 million. There is also $½ million decrease in Entertainment Duty. The estimate for Sweepstake revenue has been readjusted, and in 1962 will show a reduction of $1.5 million as compared with the 1961 estimate of $8.0 million. As regards, Commercial Broadcasting, I have taken into account the current year's collection as well as the proposed introduction of commercial broadcasting in the Federation of Malaya. On these bases, the yield is expected to be $700,000 less than the 1961 estimate of $2.5 million.

Revenue forecasts are necessarily affected by the vagaries of our entrepot trade which is so sensitive to the effects of trade fluctuations in neighbouring territories. The forecasts made of revenue yields assume that there will be no calamitous decline in the prices of primary products nor any boom conditions. Neither of these extreme conditions is likely and, with reasonably good fortune, we may see our estimates realised.

Summary of Expenditure and Revenue in 1962

With expenditure estimated at $394.0 million and Revenue at $391 million, the Budget for 1962 will be an almost balanced one. It is a budget intended to keep the public services going in the direction laid down in the Yang di-Pertuan Negara's speech while the people and the State get down to working out the detailed arrangements of merger and map out the future as the twelfth State of the Federation.

DEVELOPMENT ESTIMATES

I now turn to the Development Estimates. Development projects differ from other activities of the Government in that it is not easy to consider them in a framework of annual estimates. The reason is obvious. Many projects take more than one year to complete. Even for short-term projects, work may be started in one year and completed in the next. Hence there is need to look forward over a longer period than one year and this is one of the reasons why a Development Plan is necessary.

I therefore propose to consider the Development Estimates against the framework of the State's Four-Year Development Plan. First, I shall give a general financial outline of development expenditure in 1961. Then I shall proceed to an examination of the progress achieved in some of the more important development projects in the Four-Year Plan.

DEVELOPMENT EXPENDITURE 1961

In 1961, the amount voted for development expenditure was $166.2 million. It is difficult to say at this stage just how much of this sum would have been spent by the end of the year for reasons which I have already mentioned before. Preliminary estimates show that Development Expenditure would amount to about $100 to $110 million. This is an all-time record for Singapore. A further sum of $54 million has been entered as revotes for next year. Much of this sum represents expenditure already committed, but the bills will not be presented for actual payment this year. In assessing the performance in the first year of the Plan, it is important to bear in mind certain difficulties in getting the Plan into stride. First, a fair amount of time has to be spent in preparation, design and planning of public works and building construction. I have already referred to the shortage of architects, quantity surveyors, engineers in the Public Works Department. This is a source of constant anxiety to the Government. Further, in many cases, sites for buildings and routes for roads require preliminary steps, such as the acquisition of land and resettlement of squatters, before work can actually proceed.

To tide over the present shortage of technical personnel, we have tried to recruit men from overseas on short-term contracts pending the training and recruitment of local personnel. I have already previously mentioned that we tried to recruit from Australia, New Zealand, the U.K., Japan, and Israel and we are in communication with these Governments. To this list must be added Western Germany. Overseas recruitment is by no means an easy task as the shortage of experienced technical personnel is worldwide. Further, recruitment procedures have to be agreed with the government of the countries concerned and this is a time-consuming process. Some small success has been achieved, though I hope that next year we shall be able to get more staff. We have so far been able to recruit from Israel two engineers and one architect, men of substantial experience. They have been offered three year contracts and should be coming to Singapore soon on completion of certain formalities.

In the meantime, we have accelerated the training of local staff to acquire the qualifications needed. A total number of 93 scholarships was awarded in the last two years of which no less than 76 relate to training in technical and specialist occupations. In the next few years, the number of scholarships for training in professions experiencing short supply will be stepped up. But the acquisition of such professional skills will take a long time and we shall reap the rewards only after five or six years, or more.

I now turn to review the progress of the more important projects entered in the Four-Year Plan. I will discuss the Plan under the main heads in which it was divided, namely, Economic and Social Development.

ECONOMIC SECTOR

Economic Development Board

The establishment of the Economic Development Board on the 1st August will prove to be a landmark in Singapore's economic history. The Board will be the instrument through which the State will mount its major effort to industrialise the economy. The Government has appointed a senior civil servant to the chairmanship of the Board. Other members representing banking, trade, professional and trade union interests have been appointed. The Board has recruited a Director, who was sent to Singapore under the United Nations' Opex Programme, and he assumed duty a month ago. Further key personnel are required and the United Nations are being approached for urgent assistance. The staff needed are a senior industrial economist, an officer to head the Technical Consultant Service and three other officers to staff the service. These three officers are, one, an industrial designer, two, an industrial engineer, and three, an industrial accountant. There is also need for a chemical engineer and a mechanical engineer. Local recruitment for the staff of the Board has taken place by secondment to the Board of two administrative officers both with honours. degree in economics, and a mechanical engineer with very high qualifications. Direct recruitment for additional staff is in progress. In addition, four students with excellent results in last year's Higher School Certificate examinations in Science subjects were awarded scholarships to pursue courses in Mechanical, Electrical and Chemical Engineering in Britain.

The Board has only recently commenced work. Much of this work will be to complete the preparations already set on foot before its establishment. Some solid progress, however, has already been registered. A loan of $0.5 million on favourable terms has been made to a local shipbreaking firm in line with Government's policy to encourage shipbreaking. There are six applications now for loans being considered by the Board amounting to $4.5 million. Applications for pioneer status in industry are processed in the first instance by the Board. At present 12 industries have been granted pioneer status. They have an authorised capital of $104.5 million and a subscribed capital of $86.2 million. More than 1,300 additional permanent jobs would have been created when all these industries are in production. At present, five have commenced production and another two more will do so before the end of the year. There are 27 new applications for pioneer status currently under consideration. These are expected to provide permanent jobs for 1,900 persons and have a total authorised capital of $105.5 million.

Industrial Research Unit

With the assistance of the New Zealand Government, our plan to establish the Industrial Research Unit is now nearly complete and it is expected that the Unit would commence functioning early next year. The Unit will assist local manufacturers to solve their production problems. Local staff has been recruited and two members are now in New Zealand undergoing training.

Jurong Project

Work has commenced on the development of the Jurong industrial site and progress is satisfactory. To ensure rapid implementation of this important project, the Government has formed a new organisation known as the Jurong Industrial Development Unit, headed by an engineer seconded from the P.W.D. and a surveyor and planner. The Unit works under the general direction of the Economic Development Board. Some $600,000 would have been spent by the end of the year and works to the value of another $250,000 have already been committed. Further, a sum of $4.3 million has been spent on land acquisition. So far, the main works in progress are:

(1) the construction of the South Access road,

(2) the construction of a culvert at the Jurong River,

(3) the levelling of Hill No. 12 and associated reclamation works.

Surveying of other hills to be levelled is proceeding. In addition, test borings of the proposed wharf line are nearing completion. These works now in progress are giving jobs to more than 220 men, of whom 70 are residents of Jurong.

Next year, development work in Jurong will be considerably stepped up and it is expected that $15 million will be needed to pay for earth works, roads, development of the wharf area, reservoir to supply industrial water, sewerage, drainage, etc. The target for 1962 has been fixed as follows. By March next year, it is hoped that the site for the Steel Mill (Phase I) would have been completed. By late 1962, electricity, water supply and telephone services would have been brought to the area. By the end of 1962, the first phase of the lighter wharf should have been completed with one berth westward of Tanjong Kling ready by June, and, if justified by need, a second berth soon after that. Work on the light industries area north of the Access Road should be completed by August 1962, while part of the heavy industry area should be available for occupation by the end of 1962. Other Industrial Estates

In addition to the main Industrial Centre at Jurong, four small industrial estates are in an advanced stage of completion. They will provide sites for :140 factories. These industrial estates are sited at Redhill, Tanglin Halt, Bendemeer and Kampong Ampat. On some of these sites, standard factory units will he built. Thirty-four standard factories are planned for Redhill itself; of these, eight have been completed. The Housing and Development Board, which is in charge of general supervision of these estates, has reported that applications for factories and sites are satisfactory.

Kallang Project

This is to reclaim land in the swamps in the area known as the Kallang Pudding. While the general outline has been worked out, the detailed design has not been proceeded with. Owing to the shortage of technical personnel, it has been necessary for the Singapore Government to make a request to the Government of West Germany for technical assistance in the planning and design of the scheme.

Public Utilities

Power and water expansion projects will be financed by a World Bank loan, consultants to produce the details and specifications of the new Power Station have been appointed and the work of designing is in progress. The choice of consultants for the water expansion scheme is under consideration.

East Wharf Project

The first of the four new berths laid down in the Four-Year Plan was completed in May this year. The other three berths will be completed next year.

Civil Aviation

Good progress is being made on extending the runway from 8,000 to 9,000 feet. In fact, the work is nearing completion. The design of a new passenger terminal is about to be completed and tenders are expected to be called for early next year. In addition, agreement on types of telecommunications equipment to be used by our Airport has been reached between the Governments of Singapore and the United Kingdom. This is to fulfil the conditions for the grant by the British Government towards telecommunications and navigational aids development. For airport development projects, it is expected that $4 million of the grant of $6.5 million would be claimed next year.

Roads

The somewhat ambitious Four-Year Programme for road works is being reexamined. The Public Works Department has worked out a revised programme and I propose to set up a Roads Review Committee to study this revised Plan, taking into account all development requirements such as industrial, commercial, residential, traffic, etc. The Roads Review Committee will consist of representatives from the Economic Development Board, the Urban and Rural Services Consultative Committee, the Housing and Development Board, the Planning Department, the Public Works Department, the Registrar of Vehicles, the Traffic Police and the Economic Development Division of my Ministry. The Committee will evaluate the revised programme and arrange priorities, bearing in mind the capacity of the Roads Section of the Public Works Department.

SOCIAL SECTOR

Schools

Satisfactory progress has been made on the School Building Programme. Ten schools have been completed this year, six primary and four secondary. Another ten are in an advanced stage of construction. Work has commenced on another nine schools, four primary, two secondary and three secondary technical. It is the policy of the Government to build larger and taller schools. As a result of the number of schools completed this year, there are available places for an additional 10,560 children. With schools soon to be completed, there will be places for a further 10,560 children. This is a satisfactory achievement. Housing

When the Four-Year Development Plan published details of the Housing Programme of the P.A.P. Government, it was received with mixed and deep feelings, with hope by those in need of housing, with sour scepticism in politically hostile quarters. The target of 10,000 buildings a year represents nearly three times the best that had been achieved in any one year in the past, and four to five times the average performance of previous governments. For the first year of the Plan, a target of 7,096 homes was set. This target is likely to be over-fulfilled. The last report I have is that 4,410 homes have already been completed at Bukit Ho Swee, Tiong Bahru, MacPherson and Queens-town. Another 11,257 are under construction, of which 3,044 will be completed by the end of this year. The number of homes expected to be completed this year is therefore 7,454. The Board expects to meet its future target of 10,000 homes a year well in advance of its time-table. The end of next year will see the end of the long and frustrating years of waiting for decent homes by more than 10,000 families on the register of applicants. Some have waited for six or even eight years. By next year there will be a home for each one of these families, and at rents they can afford. This is a record achievement in the provision of public housing and can be claimed as a major success of the P.A.P. Government. The achievement is all the more remarkable if we bear in mind that the Housing and Development Board had to start with what was left of the wreckage of the former S.I.T. For this outstanding performance we are greatly indebted to the honorary members of the Board and the permanent officers who implement the policy. In particular, I must mention the drive, resourcefulness and skill they have displayed under the able guidance of the Chairman of the Board.

Television

Planning has reached an advanced stage and tenders for equipment had been under detailed scrutiny for months. Negotiations are in the final stages. Delivery of equipment is expected to be made by the middle of next year. The Government intends to commence television broadcasting once the Transmitting Station is ready. A permanent television studio may take some time to build, but, in the meantime, a temporary building could provide a two-channel service of three to four hours a day, which could be operational sometime late next year.

National Theatre

The site at King George V Park has already been levelled and piling work for the foundation of the Theatre will begin shortly. The Theatre is expected to be completed by the rend of next year.

1962 DEVELOPMENT PROJECTS

Our development proposals for 1962 follow, in the main, the proposals for expenditure already set out in the State Development Plan. With the exception of a few new projects, the others are continuing ones which have been initiated this year, or for which it has been possible to go into more detailed planning this year. The new projects included in the Development Budget have been clearly marked as such, and I propose to discuss only the major ones. There are two of them, namely:-

(1) A multi-storey car park;

(2) The Singapore Conference Hall and Trade Union House.

Multi-storey car park

The question of a multi-storey car park is one which has been given long and careful study by both motorist organisations and public authorities in the past. A provision of $2 million has been entered under Head D. 19 in the Draft Development Estimates for 1962 for a multi-storey car park to be built in the centre of the City.

The need for a multi-storey car park is now more pressing than ever. In common with most growing cities the traffic problem in Singapore is becoming very acute, because of the increasing number of vehicles coming on to the road every month. An average of 550 new cars are being registered every month, and the rate of increase of motor cycles and scooters has lately become quite phenomenal. Between September 1960 and September 1961 the number of motor cycles and scooters on the register increased from 17,244 to 26,008, an average increase of 730 per month. While all this testifies to a measure of affluence in our society, it also increases our traffic problems.

The proposed site for the multi-storey car park is a piece of vacant Crown land bounded by Cecil Street, Cross Street and Market Street. Detailed plans have not yet been drawn up but it is envisaged that a ramp type garage of 9 or 10 storeys high will be constructed capable of accommodating 800 to 900 cars and a fair number of motor cycles and scooters. The garage, when completed, will be operated by the Government. Preliminary estimates of revenue and expenditure show that the garage should be self-supporting.

Singapore Conference Hall and Trade Union House

The Trade Union House project is a fulfilment of the P.A.P. Government's pledge to the workers of Singapore. The building which is to be erected will incorporate the Singapore Conference Hall, and will be sited on approximately three acres of land at Shenton Way. Soil tests have been completed and a competition among Singapore architects for the design of the building is in progress. Premiums amounting to $6,000 would be awarded to the first, second and third prizes.

The total cost for this new project has been estimated at $4.15 million, of which $3 million will be required for the building itself. The building is expected to hold between five and eight storeys, and the facilities will be varied and substantial.

There is a clear need for a Conference Hall of adequate size and with adequate facilities in Singapore. With the achievement of independence of Asian countries and their subsequent membership of the United Nations and its agencies, each year sees innumerable conferences of delegates of independent Asian nations. Singapore, standing on the verge of independence, should be prepared to make its contribution to the great international effort in Asia to bring Asian countries closer together to discuss their common problems. As it stands in the centre of international sea and air communication routes, Singapore is well placed to serve as a venue for many of these conferences. But we do not possess the facilities needed.

Accordingly, a Conference Hall with the Trade Union House in the same building should be constructed as soon as possible. It is not only a matter of national prestige; if we were to act as host to other nations, we should see to it that the facilities we provide are of adequate standard.

The Government has therefore decided that the Conference Hall should be a substantial one. The design, construction and equipment of the Hall should seek to attain acceptable standards of dignity, elegance and taste. There will be an air-conditioned auditorium which will seat 1,000 people. There will be provision in the auditorium for simultaneous translation equipment which is used in all international conferences. In addition to the main auditorium, there will be another three conference rooms each of about 1,000 square feet, a large reception hall and lounge with a buffet service, library and reading rooms, a theatrette, a canteen, a kitchen, as well as residential accommodation for visiting trade unionists and conference delegates. The offices and conference rooms of the Trade Union House will be sited in the same building.

New Revenue Proposals

Mr Speaker, Sir, I now come to revenue proposals for 1962. It is obvious that this is not the time for new taxes and I do not intend to introduce any new taxes next year, nor to raise existing ones. Only import duties may be introduced or varied if it is necessary, to protect local industries. I would take this opportunity to announce that the Government has decided not to proceed with two of the major tax measures announced in the last Budget. The taxes concerned are the Business Registration Tax and Fees to be levied on certain professional persons in private practice. Legislation to authorise these new taxes had been completed after discussion with several professional associations. By the time these discussions were completed and legislation drafted, the prospects of merger and a reunification of the professional bodies and associations became a pressing point against our creating anomalies which would add to the difficulties after merger. Moreover, there was less justification to proceed with the introduction of these measures, when the first draft of next year's Budget showed that expenditure and revenue could be held in balance without these measures.

The Government, however, intends to proceed with introducing legislation to regulate the registration of certain professions, such as accountants and engineers, which at present are not covered by any Ordinance. Members of the professions concerned have stated that they would welcome such a move in the interest of maintenance of standards of their profession.

I intend to make a review next year of the incidence of the Property Tax on attap houses. There has been a great deal of misunderstanding on the liability to tax on attap houses. Many of these houses are occupied by poor people who cannot afford better homes. On the other hand, illegal builders are in the practice of setting up attap houses on unauthorised land and selling or renting them out to unsuspecting members of the public.

When the rates of property tax in rural areas were raised last year, special concession was given to attap houses. These properties were not affected by the increases in the rates of tax. Further, all houses, whether built of attap and plank or otherwise, retain the old rates of tax if their annual value is $240 or less. But, of course, yearly revaluations of annual values do take place as a matter of course. And properties which were under-valued have had their annual values raised. Accordingly, some owners of attap houses thought that this was contrary to the policy outlined in the last Budget.

It has been represented to me by Government Assemblymen that in the case of attap houses in areas bearing the maximum rate, that is 36 per cent, there is a case for making some concessions to owner-occupiers of attap houses, on the grounds that these houses do not enjoy all the facilities which permanent buildings do. For instance, roads in districts where most of these attap houses are found are usually unmetalled and in poor condition. Few of these houses are supplied with water, light, modern sanitation, or other amenities. I propose to have these problems re-examined to see whether or not concessions in the way of tax reduction are justified.

Mr Speaker, Sir, this may be the last Budget of the State of Singapore under its present Constitution as a self-governing State. If not the last, it will certainly be the penultimate, for by next year, or by 1963 at the latest, we would have merged into Greater Malaysia. No one could have foreseen the pace of events at which we have advanced in the last few months towards our destiny of independence through merger. This is the goal towards which the P.A.P. wants to lead the country, and we are now in sight of fulfilment.

In the last ten years, the citizens of Singapore have had more than a fair share of turmoil and tribulation. Perhaps more is yet to come. But it is remarkable that even under these troubled conditions, we were able to press ahead as vigorously as we did. But once we have passed through these troubled waters and move into calmer seas, the talent and energy of our people will find immeasurably greater outlets of expression. For in Greater Malaysia, not only will we have a strong stable central government which will give certainty and purpose of direction in political affairs, but we shall also have an immensely wider field for the exercise of our industry and enterprise.

Sir, I beg to move.

4.15 p.m.

Mr Speaker: The question is, "That the Assembly approves the financial policy of the Government for the year 1962." In accordance with paragraph (1) of Standing Order No. 83, the debate now stands adjourned.

Debate to be resumed, what day?

Dr Goh Keng Swee: 7th of December.

4.16 p.m.