LOANS (INTERNATIONAL BANK) BILL

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I beg to introduce a Bill intituled "An Ordinance to provide for the raising of loans from the International Bank for Reconstruction and Development by the Government of the State of Singapore and for matters connected therewith."

Bill read the First time.

Second Reading

Mr Speaker: Second Reading, what day?

Dr Goh Keng Swee: Now, Sir, I lay upon the Table a Certificate of Urgency signed by the Yang di-Pertuan Negara in respect of the Loans (International Bank) Bill.

Certificate of Urgency handed in.

Mr Speaker: The Certificate is in order. Are typed copies of the Bill available for the use of Members?

Dr Goh Keng Swee: Yes, copies of the Bill are with the Clerk.

Typed copies of the Bill distributed to hon. Members.

Dr Goh Keng Swee: Mr Speaker, Sir, I beg to move that the Bill be read and proceeded with upon all the stages on a Certificate of Urgency. The Bill before the House is a short and fairly straightforward one.

Mr Speaker: Order. This is one of the Bills which require the Yang di-Pertuan Negara's recommendation. Will the Minister please signify?

Dr Goh Keng Swee: I have the recommendation of the Yang di-Pertuan Negara that the Bill be proceeded with.

Sir, I beg to move, "That the Bill be now read a Second Time" and be proceeded with upon all the stages on a Certificate of Urgency.

The Bill before the House is a short and fairly straightforward one. It is modelled on Bills prepared for dependent territories, such as we are now today, which the World Bank requires before entering into any loan agreements. The Bill seeks to enable the Government to enter into one or more agreements with the World Bank for loans to finance capital projects undertaken by a Statutory Authority. The World Bank will lend only to member Governments or to non-member Governments or institutions if such loans were guaranteed by a member Government. It is quite normal for the World Bank to take one year or more to process a loan application. It has to satisfy itself that the loan granted is indeed to finance a capital project. Such a project must contribute towards the reconstruction or development of a country. It is also necessary to satisfy the Bank that such a project will be implemented and subsequently managed by a statutory authority that will be efficient and competent. The statutory authority running it will not only be able to provide for its proper supervision and management but will also be able to operate on a sound commercial basis to annex a return of profits not only to cover maintenance and loan repayments but also to provide for future expansion. The World Bank will also have to ensure that the loan is made to a country that is economically stable and that the guarantor country is in a sufficiently sound financial position to honour its pledge.

Members will recall that the Government has been negotiating with the World Bank for a loan for the new Pasir Panjang Power Station. These negotiations have reached a stage when the World Bank is ready to sign the loan agreement; and indeed, it was only two days ago that the Singapore negotiating team returned from Washington after having completed their negotiations with the World Bank.

The Bank has expressly required that before such a loan agreement could be signed and made effective, legislation must be enacted to provide for the establishment of a statutory authority - in this case the Public Utilities Board - to which the loan will be made. We must also have legislation to enable the Government to borrow from the World Bank and to ensure that certain of the requirements in regard to guarantee are sufficiently safeguarded. It is necessary for the Public Utilities Bill, therefore, to be passed, as well as the Loans (International Bank) Bill to be enacted on a Certificate of Urgency because of the impending establishment of Malaysia. The Prime Minister will today introduce the Public Utilities Bill, also on a Certificate of Urgency.

The Singapore Government is not a member of the World Bank, and al, though it has been negotiating with the World Bank for a loan, one of the requirements was that a loan should be guaranteed by the United Kingdom Government. If, however, the signing of the loan agreement is delayed until very near to Malaysia, the United Kingdom Government may find it embarrassing to stand guarantee for this loan on the ground that it would be more proper for such a loan to be guaranteed by the Central Government of Malaysia after its formation. In this case, the World Bank may want to re-examine and reassess the whole situation all over again, and this may well mean that the efforts that have been put in over the last two years or so would be futile.

It is therefore necessary now to take both the Loans (International Bank) Bill and the Public Utilities Bill through all stages on a Certificate of Urgency in order that the Singapore Government can enter into a loan agreement that has been negotiated with the World Bank, and to complete the signature of this agreement at the earliest possible date in order that the loan can be effective for the financing of the Pasir Panjang Power Station.

Sir, I beg to move.

Question proposed.

Mr Rajah: Mr Speaker, Sir, I do not rise to oppose the position where the Government seeks to get authority to borrow monies from the World Bank, hut I rise to say a few things on what I consider to be the inherent powers of the Legislative Assembly insofar as loans are concerned.

Mr Speaker, Sir, under the Constitution, all public debts become statutory expenditure, and any statutory expenditure cannot be debated when the Estimates are presented to the House, and by virtue of the Constitution itself, any items of statutory expenditure are by themselves passed without debate in this Assembly. If that is the correct position - and I submit it is the correct position - what this Bill seeks to do then is this. Under clause 3 of the Bill it seeks to give to the Yang di-Pertuan Negara powers to borrow from the Bank such sum or sums as may be required by a statutory authority for the exercise of its functions. We all know, of course, that this is merely a constitutional way of saying that where the Cabinet thinks fit then the Government of Singapore may borrow from the World Bank.

Then again, Mr Speaker, Sir, under clause 3 (6), it goes on to say:

`If any of the provisions of the loan agreement are inconsistent or in conflict with any law in force in the State, the provisions of the loan agreement shall prevail.'

Then again, on page 4 of the Bill, in clause 5:

`All sums borrowed under the powers conferred by this Ordinance and all interest and other charges thereon shall he a charge upon and shall be payable out of the general revenues and assets of the State which are hereby appropriated to the purpose.'

In other words, these loan monies will be charged against the Consolidated Fund in so far as repayments are concerned, and, as I have said before, once it becomes statutory expenditure, then the Assembly ceases to have any control or say over such expenditure.

Then again, Mr Speaker, Sir, under clause 8:

`Notwithstanding any written law, the Yang di-Pertuan Negara may exercise all such powers and authorities and do or cause to be done all such things as appear to him to be necessary for giving full and complete effect to the loan agreement.'

In other words, what this Bill seeks to do is to give to the Government absolute powers of borrowing from the World Bank, and when the Government chooses to borrow from the World Bank, the Legislative Assembly becomes absolutely powerless. I wonder whether that is a good situation.

Mr David Marshall: Mr Speaker, I rise on the same issue. I am in complete agreement with the principle of the Bill. I naturally support the powers sought for purposes of obtaining loans for our development plans, but I view with genuine alarm the provisions contained in the Bill which in fact - maybe not in intent - brush away at one stroke the entirety of the law of the State. It provides not only for a loan agreement to be made with the International Bank but it also provides for guarantees by the United Kingdom Government and any other government. Incidentally, Sir, it says - attention has been drawn to it by the previous speaker - "notwithstanding any written law to the contrary", anything that the Government may put in that agreement with the Bank and the guaranteeing State would be law.

We would be completely abdicating all our powers, Sir, it seems to me, quite unnecessarily.

I appreciate that the Minister has indicated that the Bill takes the form of enactments in other independent territories which "we have become", according to him, but whether we are independent or not is not the point. The point is, are there really any such provisions in any country? Is there any legislature which has permitted itself to pass a law whereby it abdicates its powers and puts them into the hands of a single dictator who may do what he pleases?

I know, Sir, it will be urged, and no doubt properly urged, that it is not intended to abuse the powers that are given, for the Bank may wish to know without referring to our laws that the provisions of that agreement will be binding. Sir, if necessary, it could be said, "notwithstanding any laws to be made", so that you could not pass laws which prejudice an existing agreement; but to say "notwithstanding any law", wiping away seemingly your own constitution and any laws that are in existence, I find it very difficult to understand, Sir, and I feel that this requires further clarification. As you see, Sir, it causes me some anxiety, and I have tabled amendments before you for that purpose. I do hope that the Government will take these criticisms in the spirit in which they are being offered as being helpful and for purposes of proceeding constitutionally. I am not suggesting that they do in fact seek to obtain, through a Machiavellian manoeuvre, powers whereby they can then destroy all our laws, but in law, that is what is happening, even though that power may not be exercised.

Mr Ong Chang Sam: (In Mandarin): Mr Speaker, Sir, we have heard the Minister for Finance giving his reasons for the Certificate of Urgency on this Bill I would like to point out that since the Government came to power, more than three years have elapsed, and they want this House to pass this Bill in a hurry in order to borrow money from the World Bank. If a loan from the World Bank is in the interests of the people of Singapore, then on principle we will not raise any objection. But in the context of the entire Bill, we can see that the Bill seeks to ignore and disregard the representatives of the people to raise questions on the justifiability of the loan.

It is provided in the Bill that when the Yang di-Pertuan Negara thinks fit, that is, if the Government thinks fit, the Government may borrow money from the World Bank and enter into agreements thereunder before the amount of the loan is made public to the Members.

It is also provided in this Bill that the Government can enter into this agreement first, and then within 30 days report to this House the contents of this agreement. But let us take this present Session of the Assembly. There has been a period of several months when we did not meet. If during this period when the Assembly was not in session the Government had borrowed some money from the World Bank, we would not have been able to know how much the Government had borrowed from the World Bank, and we would not have been able to know the contents of the agreement entered into.

Mr Speaker, Sir, we know that to get a loan of this nature we have to pay interest, and the interest has to be paid out of revenues of the Government collected from the people. The interest should be approved, in the first place, by this House before it can be paid by the Government to the party concerned. Since that is the position, Members of the House will have every right to understand, before the agreement is signed, what is to be incorporated therein, what will be the conditions to he attached to this loan by the World Bank, and what is the rate of interest. All such things must be made public to the Members of this House. This is very important. But in the Bill tabled by the Minister for Finance, all we can see from it is that until the Minister for Finance, or the Government of Singapore, has already signed an agreement with the World Bank or any other government, then we will be able to know; so by then it will be too late for us to raise any objection because a fait accompli has already been made, an agreement has already been signed, and we cannot do anything about it.

Mr Speaker, Sir, the second point I would like to raise in connection with this Bill is that, according to the Minister for Finance, Singapore is not a member nation of the World Bank, and so to make a loan from the World Bank, we must have another nation to stand as guarantor before such a loan can be made available to us. I want to ask him if lie will assure this House whether the guarantor nation, i.e. the British Government, will in the meantime have any conditions attached to this guarantee when it is prepared to stand as guarantor. I would like him to tell this House the position regarding this matter. We would also like to know whether the guarantee made by this nation will be against the interests of the people of Singapore. Before our people make great sacrifices, the Minister for Finance has to consider such a nation carefully.

Tun Lim Yew Hock: Mr Speaker, Sir, I can understand the urgency of having such a Bill in order to enable the loan to be raised with the World Bank for the development projects which the Minister for Finance has in mind. Surely it would not be difficult for him to tell this House now what loan he has in mind and for which purpose this Bill is introduced, so that the Assembly will have an opportunity to know what the Bill is intended to effect and to what extent will it commit the Assembly. If the Minister, in his reply, can let us have some information as to the loans that he has more or less concluded but awaiting signature, the House can then pass judgment on the urgency of this Bill.

Mr Byrne: Mr Speaker, Sir, the International Bank is competently legally advised. Its funds are from an international source, and when it enters into loan agreements with State Governments, it wants to ensure that the agreements into which it enters are not held to be void by Municipal courts on the grounds that the provisions of the loan agreements are inconsistent or in conflict with any Municipal law. It is only on these terms that the International Bank is willing to enter into loan agreements with State Governments and the sub-clause which has been challenged gives effect to this intention. The Bank will also not agree to granting any loan unless the Government seeking the loan has full power to implement all the terms of the agreement. I am advised, Mr Speaker, Sir, by the State Advocate-General that such clauses appear in all Municipal Bills providing for the raising of loans from the International blank and we are not in any way introducing new precedents in this Assembly.

Mr David Marshall: Mr Speaker, Sir, I wonder whether I can speak on a point of clarification?

Mr Speaker: Too late. The Member may have his opportunity in Committee. Dr Goh, in reply?

Dr Goh Keng Swee: Sir, I think my colleague, the Minister for Law, has dealt with the constitutional position in regard to certain clauses in the Bill. We have two lawyers on the Opposition Benches who, while they agree with the general purpose of the Bill, are in some doubt whether the absolute power to borrow from the World Bank is a good thing. Now, I think in all arguments regarding the merits or demerits of the clauses, one should remember that the World Bank is a pre-eminent international institution in this world and that it is extremely selective in regard to the loans that it makes to countries. I can assure the Member for Farrer Park that the tests that are required before the World Bank agrees to advance money to any country are extremely rigid and there is absolutely no danger at all that this will open the flood-gates of finance to the State of Singapore. If only that could be the case, if only the fears of the Member for Farrer Park are genuine, then nobody would he happier than I myself, but the position is that the procedures are strict, the criteria and standards set are extremely high.

The Member for Choa Chu Kang has raised a number of points. I do not propose to reply to all of them because they do not seem to have any real relevance to the issues posed by the clauses in this Bill. For instance, he says that this Bill is defective because it enables the Government to enter into an agreement and commit the State before elected Members of this Assembly - before the people's representatives, in his own words - can pronounce judgment on whether the rate of interest is fair and just and whether the loan project is a good one. With respect, Mr Speaker, Sir, these are matters of administration and execution. They are not matters which could be properly debated in this House.

The Member has further raised the point about the powers of the guarantor government - whether there is any risk that some sinister strings or conditions might not be attached to the powers of the guarantor. The powers of the guarantor government are laid out and specified in this Bill and they are quite clear-cut and precise.

I now come to the Member for Cairn-hill. He asked what loans we have in mind. Actually he was not present when I was moving the Second Reading of the Bill. I did mention that negotiations have been completed for a loan to finance the Pasir Panjang Power Station.

Tun Lim Yew Hock: How much?

Dr Goh Keng Swee: I beg your pardon?

Tun Lim Yew Hock: How much?

Dr Goh Keng Swee: The loan comes to some U.S. $15 million, or just over Malayan $45 million. Before long, the World Bank will be sending a team to assess our water development projects on which they have in principle agreed to make a loan, and they will go through the usual routine of processing the application in great detail. These are the only two loans we have in mind to borrow from the World Bank. There may be occasions in future where we may even want to seek loans for other purposes, but that I think we can leave for the future.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill.-[Dr Goh Keng Swee].

Bill considered in Committee.

[Mr SPEAKER in the Chair]

6.25 p.m.

Clause 1 ordered to stand part of the Bill.

Clause 2 -

Question proposed, "That clause 2 stand part of the Bill."

Mr David Marshall: Mr Speaker, if you will notice, the definition of "loan agreement" excludes the guarantee agreement that would he collateral thereto between the Bank and the guaranteeing country; that is to say, in future, the Central Government of Malaysia, and at the present the United Kingdom Government. The significance of that is to be found in clause 3 (7) which indicates that the loan agreement would he tabled before the House. I would enquire why the agreement should be divided into two - an agreement between us and the Bank, and an agreement between the Bank and the guaranteeing country - and why it is considered inappropriate that that guarantee document should not be made available to the Assembly.

Whilst on the subject, Sir, I would enquire, if you think it appropriate, whether the Government would consider, for the purpose of meeting a legitimate anxiety on the part of the Opposition at the suggested unconstitutionality of the procedure here adopted and of rendering it constitutional, that the loan agreement should be such as has been approved beforehand by the Assembly. I am quite sure the Government has no fear that it would be refused any legitimate request for loans. In fact, I think it can sense the feeling of the House in the support it has already received. But what we feel anxious about, Sir, is the question of taking complete powers and then, without the knowledge of the people of Singapore, concluding agreements which may incorporate provisions of a grave character affecting the country. This is not a law for today only or for tomorrow, Sir.

6.30 p.m.

The Chairman: I cannot see how those remarks arise on clause 2. They might arise on clause 3. I certainly think they would arise under clause 3 (7), but certainly not under clause 2, would they?

Mr David Marshall: You see, Sir, if you will look at the definition of "loan agreement", it refers to clause 3 (1) - in fact closely associated - but if you rule otherwise, Sir, I shall merely ask then my first question: would it be indicated why it is considered inappropriate that the document of guarantee should not be disclosed to this Assembly?

Dr Goh Keng Swee: Mr Speaker, Sir, the loan agreement itself sets out the details of the terms and conditions of the loan. It sets out the rate of interest, the period of payment, the amounts by which it should be paid, and the general policy of the undertaking which has to make use of this money. To that extent, therefore, these are matters of public interest, and it is right and proper that they should be made public.

As for the guarantee agreement between the Bank and Her Majesty's Government or any other guarantor Government, this is a matter completely between the Bank and the guarantor Government and does not really concern us.

Mr Rajah: Does the guarantor give certain undertakings?

Dr Goh Keng Swee: The guarantor gives certain undertakings in case of default by the borrowing country. The matter really is something which concerns how the Bank can then get money from the guarantor Government. It is not a matter which concerns this Assembly at all.

Mr David Marshall: Are we to understand that the Government envisages a guarantee document in which this State is not involved at all, because in the normal course, Sir, it is a three party affair - the borrower, the lender and the guarantor - and mutual undertakings? Are we to understand that here there will be a guarantee with no involvement on the part of this State vis-a-vis the guarantor?

The Prime Minister: The obligations insofar as the State of Singapore is concerned are with the World Bank and they will be contained in the loan agreement between us and the World Bank. The guarantor, for either reasons of charity or otherwise, undertakes certain liabilities in case the Singapore Government defaults. We are in no way obliged to the guarantor by the agreement between the guarantor and the World Bank, nor do we incur any obligations. There is no agreement between the guarantor and us, or any strings or conditions which the Member for Choa Chu Kang may have suggested in his speech. It so happens that the guarantor in this case feels that we are a safe security and that we have sufficient assets in any case if we default. There the position lies.

Question put, and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3 -

The Chairman: The Member for Anson has indicated that he is moving an amendment to sub-clause (6) in page 3. Does any other Member wish to move any amendments before sub-clause (6)? This is the opportunity.

Mr David Marshall: In view of the statement made by the Minister, Sir, I should like to move an amendment to sub-clause (5) .

The Chairman: Sub-clause (5), yes. Will the Member indicate the amendment?

Mr David Marshall: In page 3, line 15, after "shall", to insert "after approval by motion by the Legislative Assembly".

The Chairman: Perhaps the words to be inserted could simply be "after approval by the Legislative Assembly".

Mr David Marshall: Yes, if it please you, Sir.

The Chairman: Please move then.

Mr David Marshall: Mr Speaker, Sir, in the light of the comments made in reply to the criticisms on the somewhat unconstitutional procedure sought whereby this Assembly should abdicate its powers and scrap its laws and put everything into the hands of the Government to do what it will, I now recognise, as I had suspected, that it is the Bank that seeks protection for the validity of its agreement and is not interested in investigating our laws to ascertain it. That is perfectly legitimate on the part of the Bank, and I think the constitutional position can be met in this State whereby both parties can be satisfied by seeing to it that this Assembly is informed beforehand of the provisions of the loan and has the opportunity to debate it openly. I do not think that there is really any grave obstacle to that. Fortunately, loans, unlike customs, taxes and income taxes, are not matters which need be kept terribly secret until they are finalised, and here no damage could possibly be done by advising the Legislative Assembly beforehand of the exact nature of the loan agreement which would be tabled as a document and which could be approved by a simple motion. Then the constitutional position would be met whereby we have taken the responsibility for the terms therein contained and therefore the words - "notwithstanding any written law to the contrary" or "in conflict with any law in force in the State" - those provisions are no longer unconstitutional because we have ourselves considered the provisions which might possibly be conceived as being contrary to any of our laws, and we are satisfied with them and we have approved them; not that we would approve any provision which is contrary to existing laws, Sir,It would at that stage then be obvious that these provisions are not so much provisions whereby our own laws are being set aside, but are provisions for satisfying the International Bank that in fact our laws have been complied with. That is the major constitutional distinction. It is a very simple procedure. All I seek is that instead of tabling the loan agreement under clause 7, which would then be deleted, you table the loan agreement before it is signed; you seek the approval of the Legislative Assembly and thereafter the provisions of clauses 6 and 8 will have effect.

It might be suggested that there may be matters of urgency when the Assembly is not sitting. However, you have heard, Mr Speaker, as indicated, that the Bank takes about a year to process our request for a loan and if we can wait a year for such processing, we can wait a year and one month or maybe a year and two months, Sir, in order to obtain that loan. But I can say for myself, and I hope I can speak for the rest of the Members here, that where there is a matter of urgency requiring a substantial loan for our development purposes, the Cabinet should not hesitate to reconvene this House exclusively for that purpose.

I do urge the Government to recognise that, as it stands, the provisions here go against the grain of the Rule of Law and that there is a very simple procedure to meet the needs of the Bank and to meet the spirit of the Rule of Law and that is to table the loan agreement in this House and obtain approval by a simple motion before execution thereof.

Question proposed, "That the words proposed to be inserted, be there inserted."

Dr Goh Keng Swee: Sir, on the general observations made by the Member for Anson that some of these clauses really, go against the grain, I think he, as a lawyer, probably knows that it is quite invalid. In fact, it is very common for two parties to sign an agreement which provides that notwithstanding any provision of the law, they will do such and such a thing. For instance, the parties may say that they will send all their disputes to arbitration in a certain manner although the law provides that arbitration will be conducted in another manner. So to that extent, the Assembly itself as the supreme legislative authority in this State can decide in this instance that they will observe the conditions of the loan agreement even though it might not square with some minor laws or Municipal by-laws or local regulations that may be in force. I think my colleague, the Minister for Law, has made that clear.

As regards the proposal that the loan agreement should be approved in the Assembly before it is signed on behalf of the Government, I think it is a pity that we are under some difficulty over this. First, the present programme is extremely tight. As I have said, the U.K. Government is prepared to extend its guarantee only within a matter of weeks from now: and if it comes too close to Malaysia, then they say it should he the Federation Government which should take on the guarantee. That means a delay of some considerable time because the Federation Treasury will want to go through the whole process all over again. The net result will be very damaging to our expansion plan. But that is a practical difficulty.

There is one difficulty which will certainly stem from the World Bank philosophy itself. The World Bank has always wanted to make its operations independent of political considerations. In other words, it judges a country not by the colour of its Government but by the soundness of its currency, its economic institutions. The last thing that the World Bank would want to happen would be for the terms of the agreement to be the subject of a political debate in the Legislative Assembly. It can well happen that certain parties may take political advantage of some of the terms in the agreement as being unduly onerous or as being unduly difficult. But the terms of the World Bank are standard. They apply to all countries which want to borrow from the Bank, and variation is allowed only within very narrow limits.

6.45 p.m.

In practice, of course, if the Assembly were to make any variations to the terms of the loan agreement, it could well mean that the whole proposal then would have to be abandoned.

Now, one of my difficulties here is that this is the first time that we are negotiating a loan with the World Bank and it would be natural that Members may think they are being expected to support something which is quite unknown. I can sympathise with that sort of attitude. As against that, I put forward the argument that the World Bank is a respectable authority and further that the terms and conditions are fairly standard. In fact, the area for negotiations as we found out is extremely narrow and most of the discussions that took place in Washington were in the nature of discussing the future revenue, cost and future expansion programme of The Public Utilities Board. So far as the terms are concerned, as I said, they are pretty standard, and I do not think that much purpose would be served by requiring that the agreement be approved by the Legislative Assembly before signature.

Mr David Marshall: Mr Speaker, Sir, this is a valuable Bill and I can but regret that I seem to be raising technical objections to it. But, Sir, the objections are of a very grave charactor that go to the root of the constitutional concept of the Rule of Law.

The Minister has indicated that two parties can enter into an agreement, that despite an Arbitration Act, they will have a different kind of arbitration. But the fallacy there, Sir, is that it is two parties. In this case, it is not two parties who will be entering into agreement but one party with an agent of another party whose principal is unaware of the agreement because, in this case, the people of Singapore and their representatives would be unaware and would thus be surrendering completely their laws and their power-making laws into the hands of the agent who is in fact then told, "Irrespective of my wishes, go and do what you will." That is where the fallacy is and that is the constitutional danger of these provisions. They really are grave, Sir, when you ask the Assembly to say that despite any laws the Government can enter into any kind of financial agreement irrespective of the fact that that agreement is being entered into with an extremely responsible and respectable body.

It has been suggested that this august Bank would not wish to be sullied by any debate in the Assembly in respect of the terms of this agreement. But the Government has itself provided in this Bill under sub-clause (7) of clause 3 that that agreement should be tabled and should be made public to this Assembly and to the people, and consequently there is nothing then in the law to prevent a full debate on the terms of that agreement and the conduct of the Government in entering into it. So why are you preventing this agreement from being made the subject of a debate?

Finally, it is suggested that there are practical difficulties of an immediate character. I repeat, Sir, that it will be the duty of this Assembly - and I am sure it will consider it a duty which it would react to with alacrity - to attend when the agreement is ready, if for but a short while and as a matter of formality, to approve that loan agreement in order to enable the Government to execute it whenever it might be ready. On the other hand, if the Government is somewhat nervous in the context of other political animosities that exist, then I suggest that this Bill should be limited to six months - an unhappy alternative. I would rather see the Bill, to whose other features I have no objection, remain a permanent feature of our law, as it should be, and not a permanent breach of the rule of law.

Mr Ong Chang Sam: (In Mandarin): Mr Speaker, Sir, from the explanation given by the Minister for Finance, I cannot see why he cannot accept this amendment. His only reason is that the British Government has agreed to act as a guarantor - this was only a few weeks ago. If the time were to be after this, the British Government would not be willing to act as our guarantor.

Another thing is the Minister has said that Singapore's delegates to negotiate with the World Bank have just returned and that all terms of the agreement have been reached. Therefore, I cannot see why the Government should not accept this amendment because the delegates can still go there to negotiate and reach agreement. At the same time, if in the next week or the next month the Government finds it necessary or very urgent to get a loan, then I am sure that Members of this House will be very willing to have another sitting convened to discuss the matter, say before the 7th of June.

Mr Speaker, Sir, the loan by the Government from the World Bank will not be a very small sum; it will amount to several million dollars. According to the Minister, $45 million will be borrowed for the development of the Pasir Panjang Power Station. Now, this is a big sum. This sum, in the end, will have to be paid by the people of Singapore. Therefore, it is necessary for the Government to let this House know the amount and the conditions of the loan to get the Assembly's approval before going ahead with the loan. Without such an approval by this House, the Government will be giving the impression to the people that there might be some inside story - otherwise why can the Government not let the loan be approved by the Assembly first before the Minister goes and signs the agreement for the loan?

I am of the opinion therefore that the Government should accept this amendment in order to enable the representatives of the people and the people themselves to know exactly the amount the Government is going to borrow and also the conditions to be embodied in the agreement for the loan.

Mr Byrne: Mr Speaker, Sir, this Assembly is a sovereign Legislature in that within its powers it can make laws for the peace, order and good government of the State, and those powers cannot under any circumstances be questioned. Sir, that is a proposition which no constitutional lawyer, except the Member for Anson who is well known for his eccentricities, would ever be prepared to challenge.

This Legislature is competent to enact that the terms of an agreement entered into by the Government with the International Bank shall have the force of law, and if there is any conflict between the terms of the agreement and any Municipal law, the terms of the loan agreement shall prevail. The exercise of such a power does not in any way derogate from the authority of this Assembly.

Mr David Marshall: Mr Speaker, I listened to the last speaker and I believe I understood him, which is more than he achieved, because I have at no time suggested that this Assembly is not competent or that these provisions were ultra vires except insofar as the agreement might be ultra vires the Constitution. I have not suggested that. I know that we are competent to denude ourselves of our powers and put them in the hands of the dictator. That is what I say goes against the grain of the rule of the law. But it is not on technicalities and I am sorry it is on technicalities the Minister has seen fit to try to reply and failed.

It is the question of the spirit of respect for constitutional procedure and for this House - and I do appeal to this Government to recognise that it has a simple way out - whereby the legitimate requirements of the Bank can be met and the respect of this House, adequate respect, can be shown and for the Rule of Law.

Mr Rajah: When I raised the question, I was not wanting this House to sight a draft copy of the agreement before the loans were made, Sir. All I was interested in was the proposition that this Bill, on the face of it, seems to confer on the Government a power whereby they could commit the Ex-chequer of this country to loans without the knowledge of this Assembly, and I thought that was a thing wrong in principle and I still hold to it.

From the title of the Bill and from the manner in which it has been drafted, it seems to me that the life of this Bill cannot go beyond the 31st of August. 1963. That seems to me to be the position. In other words, the life of this Bill is for five months. Five months is the possible life of this Bill, is it not?

Dr Goh Keng Swee: It could be.

Mr Rajah: Up to 31st August? Could it go beyond that? That is the point. So far as I am concerned, all I am interested in is this. The Minister for Finance has told us that he has only two projects in mind on which he is going to the World Bank for a loan: one is the electricity project; and the other is the water project. I take it that the water project is the Johore River scheme and that the electric project is the extension to the Pasir Panjang Power Station. Insofar as the electricity extensions are concerned, the Minister has indicated that the loan will be to the extent of $45 million. On that score, Sir, I am satisfied. The terms of the agree-merit, the manner in which repayment is to be effected, that is a matter, I think, we must leave to the Minister to achieve. I am not interested in that. What I am interested on the water side is, how much money does the Minister hope to raise from the World Bank? If I am satisfied that those amounts are well within the paying capacity of this country, so far as I am concerned, I will support the Bill.

Dr Goh Keng Swee: Two points were raised by the Member for Farrer Park. First, the life of the Bill. Well, the Bill will have validity after the 31st of August this year because after the 31st of August this year the Government that will be the guarantor Government will be the Central Government of the Federation of Malaya, and therefore this can go on because the British Government then will have no more responsibility to guarantee any loans asked by us.

Now, as regards the water project. Perhaps I can mention that the World Bank will pay only the foreign exchange content of the total cost of the development project. For instance, the Power Station in Singapore will cost much more than $45 million. But $45 million represents the cost of equipment and services we have to import from abroad. In fact, this is really the payment of the foreign exchange counterpart of the cost of this development project. Now, so far as the power station goes, it is a very high percentage.

7.00 p.m.

Unfortunately, for water it is a very low percentage because most of the work consists of earthworks, pipes and so on which are made locally. So I am afraid the amount of loan we can get from the World Bank for the water project will represent a very small proportion of the total cost. How much it is I do not know. That is a matter which their experts will come and work out. [Pause]

I forgot to reply to some of the points raised by the Member for Anson. The Member for Anson seems to think that this is in some way unconstitutional and against the Rule of Law, that we are trying to close a deal with the World Bank without the Assembly giving its approval. I know of no independent country in the world which provides that a World Bank loan shall be subject to the approval of the legislature. What the Member for Anson is asking for the Member for Choa Chu Kang is something unique in legislative experience.

Amendment negatived.

Mr David Marshall: Mr Speaker, Sir, I move, in page 3, to delete the whole of sub-clause (6).

Mr Speaker, it is with regret that I find that I have not been understood in my efforts to attract the attention of this Government to the appropriate constitutional procedure in a constitutional spirit, and that is that before this Assembly can abdicate its powers in respect of any particular law it should know what that law is and, if only nominally, that agreement should be approved by it. I cannot, Sir, now that that provision has been defeated, in conscience, permit myself to agree to sub-clause (6) which permits a Minister to sign an agreement which supersedes all law. That is in flagrant breach of the Rule of Law of which their own leader was allegedly an exponent not so long ago in New Delhi. Our experience has been before and after Delhi that their words are never translated into acts. Actually you can always count on this Government to deprive the legislature of its powers and to channelise all powers into a single dictatorship. This is it. Whether it is utilised or not, in law, by passing sub-clause (6), we are abdicating our right to pass laws, because we would give them the right not only to ignore any existing law but to take precedence over any future law. I shall be voting against this clause and I regret to inform you that I will be calling for a Division.

Tun Lim Yew Hock: Sir, I can understand the anxieties in the mind of the Member for Anson. But if we look at this legislation in the proper perspective, we may be able to have a better appreciation of the reason why such a clause is necessary. Sir, this is a law to enable the Government to borrow money from the International Bank, and the International Bank is not just a `business corporation where it will do its best to get the best terms possible out of borrowers. It is a bank of international standing meant to help develop countries which are in need of finance in regard to projects in which the International Bank itself has confidence that such development would be in the best interests of the economy of the country. So the Bank, before lending money to any government to help develop the country, will want to satisfy itself that the money is going to help the country in its development projects and not to help the government to remain longer in office, or to help the government to hold some more rallies around the rural areas to meet the people. This is for a definite development project meant for the economic uplift of the country. And. therefore, once the Bank has decided to lend a government large sums of money to help the country to raise its economic standard, surely I do not consider it wrong that the lender should want to see that there is sufficient protection that that money which has been loaned i well protected by law. I do not think that the World Bank will be wanting to demand from any borrowing government terms that are immoral or terms that are going to tie the government to the chariot wheel of any particular country. Therefore, why all the worry at all? What we want to know is, do we want this money to help develop the country? If we do, and if those are the terms on which the International Bank can only lend us the money, let us face it: let us accept the terms of the International Bank.

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

Mr David Marshall: Division, Sir.

The Committee divided: Ayes, 17; Noes, 32; Absent, 1. Ayes Noes Bani, S. T. Abdul Hamid bin Chan Sun Wing. Haji Jumat. Fung Yin Ching, Ahmad Jabri bin Miss. Mohammad Akib. Hoe Puay Choo, Buang bin Madam. Omar Junid. Lee Siew Choh. Byrne, K. M. Leong Keng Seng. Chan Chee Seng. Lin You Eng. Chan Choy Siong,Madam. Low Por Tuck. Chor Yeok Eng. Marshall, David. Goh Chew Chua. Ng Teng Kian. Goh Keng Swee. Ong Chang Sam. Kandaswamy, G. Ong Eng Guan. Lee Khoon Choy. Sheng Nam Chin. Lee Kuan Yew. Tan Cheng Tong. Lee Teck Him. Tee Kim Leng. Lim Cheng Lock. Teo Hock Guan. Lim Yew Hock. Wong Soon Fong. Lingam, S. V. Mammen, John. Absent Mohd. Ali bin Koh, C. H. Alwi. Mohd. Ariff bin Suradi. M. Ismail Rahim. Ong Pang Boon. Rajah, A. P. Rajaratnam, S. Ramaswamy, S. Sahorah binte Ahmat, Madam. Seow Peck Leng, Mrs Tan Kia Gan. Thio Chan Bee. Toh Chin Chye. Wee Toon Boon. Yaacob bin Mohammed Al-Haj. Yong Nyuk Lin.

Amendment accordingly negatived.

7.15 p.m.

The Chairman: Sub-clause (7). May I draw the attention of the Minister to a procedural matter? The sub-clause suggests that a copy of the loan agreement shall be presented to the Legislative Assembly within 30 days of the conclusion of the loan agreement, or, if the Legislative Assembly does not sit within that time, the copy shall be presented to the Legislative Assembly within 15 days after the commencement of its next sitting. The position here is that a paper can be presented to the Assembly even when the Legislative Assembly is not sitting. It is only when the Assembly is dissolved that no papers can be presented.' So if the Minister will consider altering the last part of the sub-clause to read: "or if the Legislative Assembly has been dissolved, the copy shall be resented to the new Legislative Assembly within fifteen days after the commencement of its first session", that will meet the procedural position here.

Dr Goh Keng Swee: Yes, you are right.

The Chairman: So will the Minister move, in line 29; to leave out from "Assembly" to the end of line 32 and there to insert "has been dissolved, the copy shall be presented to the new Legislative Assembly within fifteen days after the commencement of its first session." Will the Minister just move simpliciter?

Dr Goh Keng Swee: I so move.

Amendment agreed to.

Clause 3, as amended, ordered to stand part of the Bill.

Clauses 4 to 7 inclusive ordered to stand part of the Bill.

Clause 8 -

Mr David Marshall: Sir, I move,

In page 5, line 20, to leave out "Notwithstanding any written law".

On the same principle as I have already indicated in respect of clause 3 (6), I find it repugnant to suggest that the Yang di-Pertuan Negara will be required to act contrary to laws which he himself has authorised, but in view of the tenor of the debate so far, I have nothing to add.

Amendment negatived.

Clause 8 ordered to stand part of the Bill.

Clause 9 ordered to stand part of the Bill.

Bill reported with an amendment; read a Third time and passed.