APPROPRIATION BILL

Order for Second and Third Readings read.

2.33 p.m.

The Minister of Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I have the Yang di-Pertuan Negara's recommendation that this Bill be proceeded with.

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

Mr Speaker, Sir, the Main Estimates of Revenue and Expenditure for the year 1962 have been considered and approved by the Assembly as Paper Cmd. No. 35 of 1961.

It is now necessary to give legislative approval to the expenditure of the sums shown in these Estimates, and the annual Appropriation Bill now before Members is intended to so provide.

Under section 97(1) of the Singapore (Constitution) Order in Council, 1958, an Appropriation Bill containing, under appropriate heads of expenditure, the sums of money which are required for the several services of government shall be introduced into the Assembly. The Appropriation Bill lays out all the amounts approved by the Assembly in the Estimates of Expenditure and arranged under the Heads of Expenditure shown on pages 41 and 42 of Cmd. No. 35 of 1961. Once the Appropriation Bill has been approved, the Minister for Finance will be empowered to issue warrants authorising expenditure up to the amount under each Head in the Appropriation Bill to be paid out of the Consolidated Fund.

Sir, I beg to move.

Question proposed.

Mr A. P. Rajah (Farrer Park): Mr Speaker, Sir, there is one point on which I wish to touch, and that is Head 33 in the Schedule - Charge on Account of the Public Debt.

On the first occasion when the Budget was presented to the Assembly by the present Government, I raised one or two queries on the items set out under Head 33- Charge on Account of the Public Debt - and you, Mr Speaker, ruled me out of order because they were statutory debts.

Mr Speaker, Sir, under Head 33, the total figure to be allocated is set out on page 350 of the Estimates, and on pages 41 and 42 is an abstract of estimated expenditure for the year 1962, showing statutory expenditure and the amounts to be voted. Now under Head 33, the statutory expenditure is $20,549,310 and the amount to be voted by the Legislative Assembly is $1,500,710. When one examines these items, one notices two points. The first point I wish to bring to the attention of the House is subheads 4 and 5. Subhead 4 is Discount on Treasury Bills . . . . $1,500,000, and subhead 5 is Interest on Treasury Deposits .... $1,600,000. The point I wish to make is that these two subheads appear as statutory expenditure and, therefore, the Assembly has no control over its expenditure. But the difficulty here is that these are interest payments on debts which are not yet incurred and, therefore, my contention is that any interest payment on debt not yet incurred is not a public debt.

Section 97(4) of the Singapore (Constitution) Order in Council, 1958, sets out the heads of statutory expenditure and one of such heads is section 100 which reads:

'The public debt of Singapore is hereby charged on the Consolidated Fund.'

What I would like to ask the Minister for Finance is this. If he does not raise money by way of Treasury bills or does not take in Treasury deposits, then these two sums do not become payable by way of interest. That being so, how can he then come to the Assembly and say that this is statutory expenditure and that the Assembly has no control over it? This seems to be a left-handed way by means of which Government can raise money without the consent and, if I may say, Sir, without the knowledge of the Assembly regarding the purpose of expenditure. Assuming that a discount on Treasury bills is obtained at an average rate of five per cent interest, then under subhead 4, Govermnent can borrow about $30 million for 1962. Similarly, they can borrow another $30 million by way of Treasury deposits under subhead 5. So that the Government is then enabled, by the use of subheads 4 and 5, to borrow up to $60 million without the consent of the House. That is the first point, Mr Speaker, Sir.

The second point to which I wish to draw the attention of the Minister for Finance is this. Under subhead 10 on page 350 of the Estimates, there is a sum of $1,500,000 which appears as Repay ment of War Damage Interest-Free Loan, but that apparently is not a public debt. Although it seems to be a debt which is being paid out of the Consolidated Fund, yet it does not appear under Head 33 as a Charge on Account of the Public Debt, because the Minister is, in fact, asking the Assembly to vote $1.5 million for the repayment of war damage interest-free loan. Perhaps the Minister might care to explain to the House why it is that this particular debt is treated as if it were not a public debt.

Mr Speaker: Dr Goh, in reply.

Dr Goh Keng Swee: I have been assured of the correctness of regarding interest paid on Treasury bills and Treasury deposits as coming within the terms of Charge on Account of the Public Debt. Therefore, it is statutory expenditure which need not require the assent of this House before it is paid. However, I think the Member for Farrer Park has a point, that in respect of long-term le2ns, it is necessary for the Government to seek the approval of the House - at any rate as regards the maximum limit to which we can borrow by way of loans from the public. But as regards the Treasury bills and Treasury deposits, reference to this House is not necessary. I am not quite sure what the legal position is in this respect, because Treasury bills have the authority of an Ordinance which was passed by the former Legislature, and I am not certain whether or not any ceiling has been imposed on the amount that Government can so borrow. It could well be that a ceiling has been imposed under that Ordinance on the amount that could be borrowed by the Government through Treasury bills.

As regards the second point, that is the repayment of war damage interest-free loan, the position is this. Before World War II, there was a compulsory war damage insurance scheme to which various categories of business were required to contribute. After the war, the damage was assessed and large amounts were paid out by way of war damage compensation. The funds available under the war damage insurance scheme were not adequate to meet all the claims for war damage, and the U.K. Government had to come to the assistance of both the Singapore Government and the Federation Government. I think this was in 1948 or thereabouts - just a few years after the end of the Second World War. Part of the financial assistance was made by way of grants and part was made by way of interest-free loans. Although the loan carried no interest, it is necessary, of course, to make annual repayments of principal, and this is the contribution which the Singapore Government has to make to the U.K. Government in repayment of this loan. There is still another 15 years to go. I think it is for this reason that the repayment of this loan has not been regarded legally to fall within the terms of Charge on Account of the Public Debt as defined in the Constitution.

Question put, and agreed to.

Bill accordingly read a Second time.

Third Reading

Mr Speaker: Third Reading. Mr Minister.

Dr Goh Keng Swee: Sir, I beg to move, "That the Bill be now read a Third time."

Question put, and agreed to.

Bill accordingly read a Third time and passed.