ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Resumption of Business Motion.

Dr Goh Keng Swee: I will now comment on major expenditure changes in respect of each Ministry. The Prime Minister's Ministry is provided with additional sums to pay for new posts in the Corrupt Practices Investigation Bureau, an expense which none of us will grudge. However, there is a reduction of $158,120 for the Bases Economic Conversion Department as a result of more accurate assessment of the needs of that department. The Prime Minister's Ministry accordingly will show a small reduction in total expenditure.

The Ministry of Science and Technology requires new posts under its plan of reorganisation, to provide for effective economic and statistical evaluation as well as to determine the needs of industry with greater precision..

The Ministry of Finance is provided with a substantially enlarged vote, $173.7 million as against $137.9 million in 1969. Of the increase of $35.8 million, $10 million results from increasing the transfer to the Development Fund from $30 million to $40 million. An additional $2.0 million goes to a new electronic computer for the Ministry, and $1.8 million is set aside for the Population Census next June. A sum of $12.3 million represents grants to the Economic Development Board and its subsidiary agencies. This expenditure was formerly paid out of the Development Estimates, a practice which I consider erroneous. There is also a new item under Contributions and Charitable Allowances, a sum of $3.1 million being our contribution to the ASEAN Fund. The Housing Board subsidy is to be increased by $3.6 million next year.

There will be staff increases in the Ministry - 21 new posts in the new Industry Department, 12 new posts for the new Overseas Investment Section. 14 new posts in the Banking and Control Units of the Commissioner of Banking and seven new posts to look after Government's rented properties. Customs and Excise are to be provided with 74 new posts to keep pace with increased work at the Singapore Airport, at the Port Authority and Free Trade Zone and elsewhere. Inland Revenue is to be given a substantial increase consequent on the creation of 105 new posts. 52 new posts go to the Anti-Evasion Unit recently established with the assistance of the American Inland Revenue authorities. A total of 47 new posts are created for the Property Tax Division. Both Inland Revenue and the Property Tax Department have long suffered from staffing deficiencies and an effort must now be made at improvement.

The Ministry of Foreign Affairs is given an additional $2.3 million, its vote increasing from $8.9 million in 1969 to $11.2 million in 1970-71, a 25.6 per cent increase. Salary consolidation and normal salary increments account for $½ million. The requirements of 44 new posts to man overseas establishments as well as headquarters cost $¼ million. New and increased allowances add up to another $528,000. Additional travelling expenses, diplomatic bag service, etc., take a further $380,000. An additional sum of $129,450 has to be provided to the Mission in Manila while other existing Missions will cost $444,000 more.

The Ministry of Education has been given a 9.3 per cent increase, or $14.9 million. The education vote increases from $159.1 million to $174.0 million the next financial year. A total of 380 new posts are provided of which 367 are in the Technical Education Department. In addition to 367 new staff, the

Technical Education Department will have a further 843 posts transferred to it from the General Education Department. Such is the magnitude of the shift in priorities from academic to technical education.

Annual increments and consolidation of salaries to teachers in the Government service amount to $5.7 million. Grants to aided schools increase by $5.0 million as a result of salaries consolidation and annual increments.

The four institutions of higher learning, Ngee Ann College, Nanyang University, the Singapore Polytechnic, and the University of Singapore, will receive an increase in grants by an amount of $3.9 million.

The Ministry of Communications, which looks after policy on essential services to the economy by way of air and sea communications as well as postal and telecommunication services, receives a modest increase of $825,000 or 1.9 per cent. Civil Aviation gets a large part of this, by way of new staff and facilities. A sum of $150,000 is to pay for public utility charges which will be incurred as a result of the new cargo complex at the Airport, the instrument landing systems and the taxi-way and approach lights. New baggage handling equipment, including four tractors and eleven trolleys, will cost $65,500. There are also staff increases in the Meteorological Services, the Postal Services, the Telecommunications Department and the Marine Department. Demand for all these services increases with economic growth and it is the policy of the Ministry to maintain high standards of efficiency.

I have already referred to the increased allocation to the Ministry of the Interior and Defence and no further elaboration is required. Apart from the expansion of the armed forces, it is also necessary to strengthen the Immigration service. At the same time, the Ministry had found it possible to delete a total of 508 posts mainly of Police grades, thereby saving some $1.1 mill ion.

Expenditures by the Ministries of Culture and Social Affairs have been kept within bounds. They show a reduction in expenditure of $425,000 and $1.17 million respectively. The saving in Social Welfare is principally due to a decrease of $1.45 million needed by way of public assistance and the tuberculosis treatment allowance. No doubt this is the result of better housing, more employment and a better health environment.

There is little change in the Ministry of Labour. The closure of the Second Industrial Arbitration Court, made possible by improved labour-management relations, provides adequate savings to meet annual increases and some small staff increases.

The Ministry of Law and National Development gets a modest increase of $3.0 million, or 6.7 per cent on the 1969 vote of $44.6 million. Primary Production continues to expand its staff and services. The abattoir in Jurong needs more staff and so does the Car Parks Division. The Fisheries Section of Primary Production has been given $909,000 as back payment of rent to the Jurong Town Corporation for the Jurong Fisheries Port and Central Auction Market. But the main increases required by the Ministry of National Development are in respect of public works. An additional $400,000 has been provided to keep government offices, buildings and grounds in good condition, as well as to maintain properties taken over from the British Armed Forces. There is a small saving from the present policy of dismantling public standpipes and providing domestic water supply direct to homes.

The Ministry of Health gets a substantial increase of $6.4 million. More than a third of this represents annual increment of salaries and other additional payments to staff. However, there will be an increase in the volume of services provided. A total of 121 new posts will be provided to the Public Health Division of the Ministry, 68 to be deployed in environmental health, 33 in school health services and the rest elsewhere. More money is also to be spent on public cleansing, maintenance of drains in the catchment areas, supervision of hawkers and such like services. A total of 110 new refuse vehicles have been or will soon be supplied to the Ministry and they will require an increase of $240,000 on maintenance expenditure. A substantial increase in anti-mosquito activities will cost $¾ million. The years ahead will see further expansion in environmental health control. There is likely to be very substantial capital and re-current expenditure on garbage disposal. New policies are being developed in the Ministry not only to improve on existing services but also introduce new ones, particularly to combat the growing menace of air and water pollution. The experience of other countries and other cities indicates that we are well advised to take measures in advance of the deterioration to such proportions that remedies become very costly. A committee is investigating and identifying those areas of medical specialisation in which Singapore could achieve pre-eminence by providing available medical expertise with the latest in equipment and facilities.

Development Estimates, 1970-71

The Development Estimates provide for a sum of $438.5 million. This is roughly divided in two equal portions - one of $215.6 million for expenditure on government development projects, while a sum of $222.9 million is set aside for loans to statutory authorities and government-owned companies.

The major part of direct government expenditure is spent by the Ministry of Law and National Development. The budget provision for this Ministry is $95.65 million. The major schemes administered by this Ministry include the Bedok reclamation scheme, the Kallang Basin reclamation scheme, construction of roads and bridges, drainage and flood alleviation schemes, as well as sewerage works.

The Bedok reclamation scheme has been proceeding well, some 1,000 acres having been recovered from the sea at a cost of $43 million so far, and another $11 million will be required in 1970-71. The second phase of this large land reclamation scheme will cover 125 acres of land between the Singapore Swimming Club to the end of Tanjong Rhu. A further 165 acres along Nicoll Highway will also be reclaimed at a total cost of $24.9 million, of which $8.3 million is expected to be spent in 1970-71.

The Kallang Basin reclamation scheme is 80 per cent complete, 399 acres of land having been reclaimed at a cost of $22.9 million. A further $2.6 million is required next year to reclaim the remaining 93 acres.

Urban renewal is expected to cost $15.6 million in 1970-71. The first phase, rebuilding in Crawford, Sepoy Lines and Havelock constituencies on 270 acres of land has been completed with the construction of 2,500 flats and 800 shops. Another 950 flats and 97 shops are nearing completion. The Urban Renewal Department will need $1.9 million by way of salaries and wages while another $¼ million will go as Government's contribution to the United Nations State and City Planning project.

Primary Production is forging ahead with ambitious development schemes costing $2.5 million. Animal husbandry projects alone will cost $1.0 million. This includes a revote of $300,000 for completion of the Jurong abattoir, and $500,000 for the pig and poultry training and research institute. Among agricultural projects, work has started on developing hydroponics farming, while the farm licensing and collection of agricultural statistics accounts for $150,000. Fisheries will be provided with more than $½ million; most of it is for training of fishermen. It is to be hoped that this massive injection of funds into the agricultural sector will result in an improvement on the anaemic performance of 2.9 per cent growth rate in the last decade, the lowest growth rate of any sector.

Expenditure on roads and bridges is expected to amount to $13.3 million. Drainage and flood alleviation will cost another $4.2 million. This includes the cost of completing the first phase of the Bukit Timah flood alleviation project for a sum of $2.3 million. The total cost of this phase, which will drain flood waters from the Bukit Timah Canal to the Ulu Pandan River through a canal which runs into a tunnel cut under a hill, amounts to $6.84 million, spent over four years. Canals and subsidiary drains in various parts of the Island will be lined with concrete and, with minor drainage schemes, will cost some $1.9 million.

Sewerage development continues apace, and a sum of $12.1 million is provided under Head 97 for this. Major sewerage projects are under construction at the Kallang Basin, Serangoon, Jurong, Thomson Road, Urban Renewal North, Urban Renewal South, Bartley Road and Upper Changi Estate. In addition to these nine major schemes which cost $7.2 million, there will be three major sewage treatment and disposal works for extension or construction at a cost of $3.2 million. There will also be miscellaneous projects costing $1.7 million. Most of these schemes will see completion in the financial year 1971-72.

The Ministry of Health will be spending $2.6 million on Public Health services. $1.6 million will be spent in buying 55 new refuse-collecting vehicles. New cleansing and night-soil depots will be established at a cost of $678,000. There will also be development of hospital services costing nearly a million dollars.

The Ministry of Communications has important development projects under way. The passenger terminal at Paya Lebar will be redeveloped at a cost of $5 million, of which $3 million will be spent in 1970-71. It is expected to be completed by the end of next year. The existing jet and terminal parking aprons will be extended to relieve congestion, at a cost of $1.3 million. Improvements to taxi-ways, apron areas and airfield drainage will require another $1 million. The Government proposes to extend the runway now 11,000 feet long to 13,200 feet long. It will also construct a new cargo terminal and a new hangar large enough to accommodate the Boeing 747. Only token provisions, however, have been entered in the coming financial year.

The star item in the Ministry's development programme is undoubtedly the earth satellite station for which some $10 million will be required. It is also necessary to buy additional teleprinter machines and telex machines, demand for which has exceeded supply by a wide margin. The national auto telex exchange will be improved and new micro-wave radio bearers for the main trunk system will be introduced. The total bill for all these is expected to be $15.2 million.

The meteorological services will be provided with up-to-date equipment, including wind-finding radar and a replacement for the storm-warning radar.

The Ministry of the Interior and Defence will need $51.4 million, mostly for works and buildings and land acquisition, to house the new defence units.

The Ministry of Education will be provided with $22.1 million for development projects of which there is a long list. Most of these projects are for the advancement of technical education. The Technical Education Department of the Ministry has introduced workshops in academic schools so that all secondary school students will have some experience of workshop practices. In addition, the conversion of academic schools into academic-cum-technical schools and conversion of the old vocational schools into industrial centres are proceeding as scheduled. Four vocational institutes are under construction or extension and a new one at MacPherson will soon commence construction.

Expenditure on academic education consists mostly of continuing projects. However, a new building will be provided for Raffles Institution at Grange Road. Earth-works have begun on a 14.2 acre site and the building is expected to be completed by the middle of next year. The total cost is $2.4 million. There will be 28 class-rooms, two lecture-halls, seven workshops, eight science laboratories, a library, an assembly hall, a gymnasium, and ancillary rooms for extra-curricular activities. In addition, there will be a large sports field.

Under the Ministry of Labour's development projects, a Hotel and Catering Training School will cost $2.2 million. It is hoped to provide training for some 1,000 trainees a year when completed.

The Ministry of Science and Technology proposes to build a Popular Science Centre. This will give citizens a better understanding of what modern science is about; it will also be useful to secondary school science students and others. In addition, the National Museum will be improved and extended at a cost of $300,000. It is public knowledge that the Government proposes to move the University of Singapore from its present campus to Kent Ridge. A sum of $500,000 is set aside to meet the cost of planning the new university campus. The World Bank has expressed an interest in providing finance for the cost of university development.

For the first time in many years, the Judicature appears in the Development Estimates. This is to provide Subordinate Courts with decent accommodation. They are now scattered at various places along South Bridge Road, Sepoy Lines, Empress Place, New Bridge Road and Outram Road. The Chief Justice tells me that some of the buildings are not only old and dilapidated but a danger to their occupants.

A new Court building will be erected at Havelock Road to house 55 odd-rooms, chambers for judges and magistrates, waiting-rooms, witnesses' rooms and other paraphernalia required for the administration of justice. The cost of the building is expected to amount to $6.4 million.

I now come to the loan portion of the development programme. The Housing and Development Board will be provided with a loan of $100 million to finance its accelerated building programme. Hitherto, the annual loan provision stood at $50 million. Jurong Town Corporation has some $50 million set aside and this money will pay for reclamation of swamp land at the old West Coast Road, the extension of Jurong Wharf, construction of workers' flats and social amenities.

The National Stadium, the foundation-stone of which I was privileged to lay a fortnight ago, will be offered a loan of $7.8 million. It is intended to form a Corporation to run the Stadium. The income to repay this loan, as well as future loans, will come from two sources. First, the profits of Singapore Pools (Pte.) Limited and, second, the takings at the gate of the Stadium, which one hopes will exceed the cost of maintenance.

The Government has embarked on a number of enterprises in the business field, including a shipping line, a shipbuilding yard, a ship-repair yard, a small arms plant and a development bank. These require loan finance and a sum of $65.1 million has been set aside for this purpose.

The Jurong Town Corporation has been charged with the duty of developing Blakang Mati, soon to be renamed, and has commenced work. Further tourist attractions will be developed on islands in Jurong Lake. Money for these projects required in the coming financial year is estimated at $8.9 million.

Taxation Policy

This concludes my observations on the Ordinary and Development Estimates. Before I go on to discuss possible future courses our economy may take, I should say a few words on taxation policy. The Government's policy in recent years has been to depend on fast economic expansion and improved tax administration to provide increased revenue rather than raise rates of taxation to higher levels or introduce new taxes. Last year, some minor tax increases as well as new taxes were announced to meet the rising needs of our defence build-up. 1969 revenue increased by $131.5 million over 1968. The yield of new revenue measures was $30.4 million while economic expansion contributed most of the balance of $101.0 million.

Treasury estimates of tax yields, as set out in the Estimates and explained in the Treasury paper, indicate that increasing yields, resulting from economic growth, will be adequate to meet expenditure increases. I therefore do not propose to raise new taxes, apart from the recent increase in tobacco duties to bring them in line with Malaysia. Singapore, contrary to the belief of many Backbenchers, is a lightly taxed country. Tax revenues amount to about 13 per cent of G.N.P. In other countries they are much higher, as much as 30 per cent or more of G.N.P. in some instances. So long as we maintain a robust rate of economic expansion and maintain government expenditure to essentials, we need not emulate the example of these highly taxed countries.

The Near Future

With this glad news to the taxpayer out of the way, I turn to look at our immediate economic prospects. It is important that we should not be lulled into a sense of false security by the mild boom now going on. There are dark clouds on the horizon, and it is as well that we prepare for more difficult times. The first adverse factor affecting our economy over the next two years will be the completion of the British military withdrawal by 31st December, 1971. In the next three years, the economy of Singapore will feel the impact of a decline of British military expenditure, from $415 million in 1969 to zero in 1972. There is likely to be a reduction of some $100 million to $150 million for this year and a final phasing out of the remaining $250 million to $300 million in 1971. While no longer the catastrophe we once feared they would be, declines of expenditure of this magnitude cannot but have an unpleasant impact on our economy. In 1969, the reduction was estimated at some $40 million and was hardly felt.

As regards world trade which, as we have repeatedly seen, influences our economy significantly, it is unlikely to provide the substantial impetus to growth which it did in the years 1968 and 1969. In these two years, world trade expanded at unprecedented rates, 11 per cent and 14 per cent respectively. There is likely to be a slowing down of world trade in 1970. The extent of this is yet uncertain.

Much of this uncertainty derives from the outlook of the U.S. economy for this year. The American economy is so large and powerful that fluctuations in its level of activity exercise a strong influence on the economies of the rest of the world outside the Communist bloc. For just over two years, the American administration, in the last year of President Johnson and the first year of President Nixon, has been battling with the problems of domestic inflation and unsettled balance of payments position. The l960s have seen a sustained and powerful growth of the U.S. economy, the G.N.P. increasing from U.S. $503 billion in 1960 to U.S. $932 billion in 1969. In the last four years of the decade, as the American economy approached and reached the level of full employment, inflationary pressures began to build up. These pressures became grave, when military expenditure in Vietnam was substantially increased as from 1967.

With domestic price inflation there has also occurred the inevitable concomitant - a squeeze on the balance of payments. Whereas, throughout the 1950s and the first half of the 1960s, the American balance of payments on trading account invariably showed an annual surplus of anything between U.S. $3 billion and $5 billion a year, the last year or two has seen this reduced to very small amounts, quite inadequate to support the large overseas payments on account of American capital invest- ments abroad, expenditure by American tourists and government expenditure overseas, including aid finance.

Since December 1968, the Federal Reserve Board has begun a policy of severe credit restraint. Because of the strength and power of the American economy, it was only in the last few months that the tight money policy of the Federal Reserve Board has produced visible results. There have been significant reductions in the volume of industrial production, in the volume of new construction, in expenditure on consumer durables and a small increase in unemployment. Yet price inflation remains alarmingly strong, at annual rates of 54 per cent to 64 per cent in recent months.

In spite of the slowing down and even decline in several of the important economic indicators, investment plans of the large American corporations and in the public sector have not so far been reduced to the extent needed to dampen inflationary pressure. The demand for investable funds in the face of the tight money policy of the Federal Reserve Board has resulted in the rise of interest rates to historical heights.

Economic trends in the next twelve months in the United States are difficult to predict. The administration economists visualise a levelling-off of growth measured in real terms, and increase in the rate of unemployment from a low level of some 3.3 per cent in some months last year to an average level of 4.3 per cent this year, perhaps reaching 5.0 per cent at the highest level. They do not see any recession of significant proportions. They expect price inflation to moderate from the annual rate of 54 per cent last year to around 4 per cent or 44 per cent this year. They expect the economy to pick up momentum in the second half of this year.

This scenario, as set out by the administration, is probably the best development one can hope for. If events follow the course as predicted by the American official economists, then neither the world of advanced nations in Europe nor the less affluent underdeveloped countries need fear a marked decline in their trading positions. GATT (the General Agreement on Tariffs and Trade) predicts that world trade may increase this year by between 4 per cent and 8 per cent. The O.E.C.D., optimistic as ever, forecasts a 10 per cent growth. My own preference is for the GATT forecast; if the outcome is near the higher point of the GATT forecast range, there probably would be no unduly harsh impact on our economy.

However, if events take a course different from the U.S. official forecasts, it is likely to be for the worse rather than for the better. Then the negative factors created by reduced British military expenditure will be compounded. These are matters beyond our control. All we can do is to take note of possible dangers looming on the horizon and make due preparation for them. I cannot but underline my warning against the dangers of complacency.

On balance, the next three years may not be as good as the last two. Fortunately, we have accumulated sufficient fat in the good years.

The Longer-term Perspective

I now turn to the longer-term perspective, looking to the mid '70s and beyond. Unless the stability of the area is seriously upset, it is likely that we can sustain and even increase the momentum of industrial growth which we recently achieved. The Promotion Centres established by the Economic Development Board in Europe and America and Japan have gained good experience in the last few years. Unless we see a world depression developing on some scale - and the consensus among the experts is that this is an improbable eventuality - we shall see in the next few years, the fruition of many industrial projects, some of them of a size exceeding anything that we have hitherto attained. The activities connected with offshore oil exploration in the waters of the Archipelago are likely to give rise to a number of interesting manufacturing and service industries based in Singapore. The problem we are likely to encounter between now and 1975, barring a recession of course, is to provide the large numbers and wide varieties of skills which the new industries will need. In this connection, we have had the advantage of a recent study by Dr Albert Winsemius who led the first United Nations mission in 1960 to Singapore to advise on policies on industrial development. Dr Winsemius is an old friend of Singapore; in 1967 he was awarded the Distinguished Service Medal. Dr Winsemius pays regular visits to the Republic, at our request, to check on our economic health and to discern problems ahead and suggest remedies.

He completed his last visit about a month ago. His prognosis is that the shortages of skills, which we knew existed, will become increasingly serious and more acute than we had believed. For instance, his calculations indicate that despite the intention of the University of Singapore to increase the annual output of engineers from 80 at present to 210 by 1974, the Republic will remain short of engineers over the next five years by between 450 and 500 each year.

As regards management personnel, the output of accountants and business management graduates will fall seriously short of requirements, the shortage, in Dr Winsemius' estimate, coming to some 200 a year over the next three years. As regards the demand for technicians, who have to support the efforts of engineers, the position is even worse. Taking into account the large requirements of technicians in the defence forces, we are likely to be short of technicians by 1,500 to 2,000 each year over the next two years.

These estimates are based on the assumption that industrial growth, now running at between 15 per cent and 20 per cent a year, will be sustained over the next five years. There is no reason why this cannot be done. By 1974, the industrial work force should have increased to around 247,000 men. Further, as much of the increases will accrue from the establishment of large industrial units rather than a proliferation of small ones, the demand for engineers, and management and technical personnel will be of a different order of magnitude from what we have been accustomed to. This, then, will be the principal difficulty which we have to overcome - not so much to attract investment into the manufacturing industries but to supply investors with skilled personnel of all grades, without which modern industry cannot operate.

Since it takes four years for an engineering student to graduate and several more years before he acquires sufficient experience to be able to work effectively in an organisation, clearly we cannot depend on local supply to meet the demand in these fields. The problem is similar in regard to management personnel and technical staff, though here local supply, if stepped up immediately, may be able to fill the gap earlier than is possible with engineers.

It is therefore necessary, as a matter of high priority, that we should relax our immigration and work permit restrictions on the inflow of personnel belonging to the categories I have described. At present, they are given entry and work permits provided they are sponsored by an employer. That is to say, they have to find work here before they are allowed the necessary permits. It would be a clear advantage to liberalise the conditions under which such people can come into Singapore, acquire permanent residence and eventual citizenship. It would be useful, for instance, if they could be allowed here for any length of time they wish so that they can do the job-hunting and, in this way, fit into the best slots available to them. This is a matter of great urgency, as it is well known that a great amount of crimping already takes place. Indeed, the Technical Education Department of the Ministry of Education, which has to train large numbers of artisans and craftsmen, are finding it difficult to retain their engineers and technicians who have to do the training at the Department's Industrial Training Centres, Vocational Institutes and secondary technical schools. -

University Development

This discussion of the ways in which we should try to fill the gap between demand and supply of engineers leads me to two related subjects. The first relates to the levels of scientific knowledge and technological know-how which our future industries are likely to demand. The second concerns University development in Singapore in general as well as the output of scientists, engineers and technicians in particular.

In recent months, there has been increasing reference in public as well as private discussions to the need for Singapore to develop "science-based and technology-oriented industries". A well-known British financial commentator recently said that whenever he hears the phrase "advanced industrial technology" he reaches for his gun. Too often this catch phrase is used as an attempt to mulct the public purse of sizable subsidies to finance industrial research which has no hope of resulting in commercially feasible -products. I have a great deal of sympathy for this position, but for different reasons. The use of the term to our industries, existing as well as potential, is often misleading. As an -example, the electronics industry in America works at the frontiers of science and technology. The electronic components we make in Singapore probably require less skill than that required by barbers or cooks, consisting mostly of repetitive manual operations.

Let us not presume that at the comparatively low level of scientific and technological know-how that we find ourselves today, it is our role to train scientists and engineers who will engage in research at the frontiers of -knowledge.

Ours should be the more mundane, if practical, approach. In the foreseeable future, we are likely to set up those industrial activities which require assiduous application of engineering skills and workmanship in well-developed and well-known industrial processes in which we have a natural advantage by being able to produce or import engineers, technicians, craftsmen and skilled workers capable of performing the most exacting standards of work but at a much lower cost than the advanced countries could. Even so, the limitation here is that restrictions may be imposed on the import of quite a number of these products by industrialised nations which want to preserve the home market for their own industries. Further, not all countries would favour a policy whereby the techniques which they have evolved as a result of sustained and costly research and development work are passed on to others. But within such limitations, there could be a wide field to choose from.

The practical application, even at these modest levels of technology, requires a substantial upgrading of skills at all levels - from research scientists, engineers, technicians, skilled craftsmen -to standards beyond anything we have achieved now. It is in this sense that we should try to improve our reservoir of scientific and technological knowledge and experience.

This leads me naturally to the subject of the development of our Universities which are institutions to provide the requisite people to perform these tasks. It is one of the misfortunes of Singapore that the development of our two Universities has encountered difficulties in the past which have stunted their growth. In the case of Nanyang University, the deterioration of administration prior to 1964 had allowed the control of the University virtually to pass into the hands of student activists who were manipulated by the Communist United Front. Nanyang University virtually became a training ground for the higher echelon cadres of the Communist United Front. Government intervention as a security measure then became inevitable. Since the restoration of the University's administration to more normal standards, improvements have been made and standards have been raised.

The case of the University of Singapore was different. Here, until recently and perhaps not even then, there appeared to be a total absence of meaningful dialogue between the University and the Government. The University, particularly in certain departments in the Faculty of Arts, in which expatriate staff were dominant, viewed the Government not as a possible source of support and encouragement, but as a potential danger and a threat to its autonomy. Trivial incidents, which sometimes arose as a result of poor communications between the two sides, were inflated out of all proportion to their real importance. Part of the trouble seems to stem from the attitudes of some expatriate staff who have brought with them not merely a competence in their field of specialisation but also contemporary styles and postures which may be meaningful in the context of strident anti-establishment and liberal postures. In part, these reflect trends towards permissiveness and promiscuity in the societies from which these expatriates came and to which they belong. But these are totally irrelevant to the situation Singaporeans are facing.

The growth of student population as well as the increase in expenditures of the two Universities financed from Government revenues has failed to keep pace with the expansion of the economy. Enrolment at the two Universities and the Polytechnic and Ngee Ann College combined grew during the decade from 9,355 to 16,214, a 73 per cent increase as compared with a 146 per cent increase in the Gross Domestic Product.

Matters had reached such a pass at the University of Singapore that it was found necessary for a Cabinet Minister to be appointed its Vice-Chancellor. And yet, it may be that the appointment of my colleague, the Minister for Science and Technology, could be just the step required to restore a relationship of confidence between the University and the Government so that the University can develop into an institution more in tune with the needs of the society which nurtures it. There is welcome evidence that the student body and a growing part of the academic staff are becoming aware of this.

Certainly without his appointment to the post of Vice-Chancellor, it is unlikely that my colleagues and I would entertain the proposal to move the University at enormous expense from its present constricted campus at Bukit Timah to one of the most scenic sites in Singapore in the range of hills known as Kent Ridge. Since his appointment as Vice-Chancellor, it has been increasingly apparent to the Government that the University would need more funds not only to expand existing faculties and establish new ones, but also to increase the pay of academic staff to levels which will ensure that they will attract and retain the keenest minds produced in the Republic.

Improvements in similar measure are also necessary at the other University, Nanyang University. Here the problem will be, for some considerable time to come, to recruit Chinese-speaking academic staff of calibre into the University. While Nanyang graduates who have returned from post-graduate studies abroad will grow in strength and numbers, there is need to recruit senior staff in various disciplines. The field of recruitment is much narrower than is the case with the University of Singapore. Further, many of the best Chinese-speaking scientists and scholars available today -outside of the People's Republic of China are engaged in industrial research or academic teaching in the United States of America. To attract them to Nanyang University would be both a complex and expensive exercise, but some method must be found of doing this if Nanyang University were to develop in stature and repute as a centre of scholarship and research.

I have dwelt at some length on University education. The subject arose out of current and projected shortages of engineers and management personnel which proper university training programmes could in course of time help to solve. But universities have a more crucial role in the development process, if one takes a long-term view of it. Let me set the subject in its true perspective.

We have made long and strenuous efforts to attract foreign investment into Singapore, but not because we need the money. The high level of our overseas assets shows that we have more money than we can usefully spend in Singapore. We welcome foreign investors for the two things they bring with them - technology and markets. If Singapore were a large country, say, with a population of 100 million and endowed with a variety of natural resources, the open door investment policy we pursue may not be the best long-term development strategy. In such a situation we should develop an indigenous technology centred initially around the exploitation of natural resources. But this would take time, and would constrain the economy to slow growth rates for possibly several decades while universities and research institutions need to build up staff and expertise. But the pay-off would come in the end and most of it would accrue to citizens of the country.

Our situation is the opposite to what I have described. An open door policy is one which at least ensures rapid growth right from the start. When foreign corporations bring their expertise, what we experience, as a developing nation, is a brain-drain in reverse. Naturally we pay for this. We pay in the form of profits and know-how fees remitted abroad and high salaries to foreign management and technical personnel.

This is the position we find ourselves in today and it is likely to persist into the mid-seventies and, in lesser extent, even after that. It would be wrong for us to resent the inflow of management personnel, engineers and technicians from abroad. On the contrary, we could regard them as blazing the trail for the new industries which we do not have the knowledge and technology to set up ourselves. We should also regard them as presenting us not only with opportunities for future graduates of our Universities and technical schools but also as performing invaluable services in giving firm indications as to the lines of science and industrial technology which our Universities and training institutions should develop. Without such clear indications, Singapore might make the mistake of other developing nations in producing large numbers of university graduates who cannot find useful employment. Having said this, I need also say that in the long term the scientific know-how and technological processes which we now borrow from abroad must in course of time develop on an indigenous base at our institutions of higher learning. This is the task which I see as deserving of high priority in the coming decade. We must make good the neglect of our universities of the past decade when, for the reasons I have explained, they did not participate in the exciting transformation of Singapore, from colony, to a State in a Federation, and then a Republic.

Sir, I beg to move.

Mr Speaker: The Question is, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1970 to 31st March, 1971." In accordance with paragraph (1) of Standing Order 82, the debate now stands adjourned.

Dr Goh, debate to be resumed, what day?

Dr Goh Keng Swee: On the 18th of March, 1970.