ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Resumption of Motion.

Mr Hon Sui Sen: The Development Estimates provide for a total of $635.9 million, after pruning. The total proposals submitted were for $849.85 million. It has been possible to allocate to the social sector 39.5 per cent, or $61.74 million, of their requests, while the economic sector has been allocated 68.3 per cent or $114.06 million. Defence and Administration, because of over-riding considerations, receive 93.92 per cent approval, or $111.61 million requirements. Loans to statutory bodies and companies will total $348.55 million, after reduction from $407.55 million. Tables IX, IXA and IXB show how the Development Estimates provision of $635.9 million is distributed.

As in the past, a large part of the expenditure on Government development projects is allocated to the Ministry of Law and National Development. Out of the total budgetted provision of $287.5 million for Government, this Ministry will receive $96.4 million most of which will be for the major schemes of land reclamation administered by the Ministry at the East Coast Reclamation. Phases I and II of this scheme, totalling 1,125 acres of reclaimed land, are almost completed. Two more phases will be carried out in 1971 - 72. Phase III will provide 165 acres of land fronting Nicoll Highway, and Phase IV will provide another 1,025 acres of land stretching from Bedok to Tanah Merah Besar. The two phases are expected to cost a total of $67.8 million of which $16.8 million is required in 1971 - 72. At Kallang Basin, reclamation will continue. A total of 400 acres have so far been reclaimed and in 1971 - 72 a further 92 acres will be reclaimed, A sum of $2.1 million is needed for such works. These reclamations will enable us to redevelop a sea front which gives maximum use by the people of the sea and maintains the highest aesthetic skyline for Singapore, avoiding the mistakes of past private and public developments.

Another very worthy project is that of urban renewal which has been gathering momentum over the past year, and for which $13.1 million has been provided. Redevelopment of the Crawford, Sepoy Lines and Havelock constituencies is almost completed and attention has now moved to other parts of the Central Area. An additional sum of $4.2 million is required to meet resettlement expenses of the Resettlement Department on behalf of the Government and statutory authorities.

The Botanic Gardens, which has proved to be a popular attraction for both tourists and the local population will require $400,000 for improvement works to be carried out. To provide more fertiliser for the "Garden City" campaign, it is proposed to establish a refuse composting plant to convert refuse into compost which is recognised as a good soil fertiliser. The plant is expected to cost $1.5 million of which $500,000 is required in 1971 - 72.

A total of $1.5 million is provided for general development works undertaken by the Public Works Department. The works include major construction and renovation of various Government buildings and the provision of more modern facilities for these buildings. The "Garden City" campaign will be stepped up with the provision of $4.8 million for various new park schemes as well as for improvements to existing parks and open spaces. A sum of $300,000 will be spent on vehicles to enable the Parks and Trees Division to execute its work more efficiently.

Expenditure on roads and bridges is expected to amount to $14.2 million.. The major project in hand is the Pan-Island Expressway. Work on various; sections of this Expressway is being carried out simultaneously. By 1973, the Expressway will provide rapid access between the eastern (Changi) and the western (Jurong) parts of the Republic. Work on several one-way road systems will also be continued in 1971-72. These systems are aimed at relieving traffic congestion in the city. Drainage and flood alleviation schemes will cost $4.5 million. The next fiscal year will witness the completion of the first phase of the Bukit Timah Flood Alleviation Scheme, in which storm water from the Upper Bukit Timah Catchment will be diverted to Sungei Ulu Pandan and thus alleviate flooding in the area. The Bukit Timah Canal, along which earth slips have occurred, will be concrete-lined at a total cost of $1.9 million of which $1.4 million is required in 1971-72. Several new drainage schemes will be initiated in various densely populated areas and new housing estates. These include' Geylang Serai, Toa Payoh and Telok Blangah New `Town.

Sewerage development works will require $14.2 million. Most of the sewerage projects are continuing schemes. However, two new schemes are expected to be implemented in 1971-72 in Telok Blangah New Town and at the East Coast Reclamation. These sewerage schemes will provide one of the infrastructural services for the development of these two sites into recreational, residential and commercial complexes. The treatment works at Kim Chuan and Ulu Pandan require a total of $1.6. million for urgent extensions. When these are completed, the two treatment plants will have a combined capacity to serve 1.35 million people.

Of the $1.93 million provided for Primary Production, $1.07 million is required for Animal Husbandry projects. This includes $500,000 as Singapore's contribution to the United Nations Pig and Poultry Training and Research Institute as well as $40,000 for the proposed Swine Brucellosis Eradication Pilot Scheme. The proposed expansion of Jurong Fishing Port and Fish Market to increase both the port and market facilities will require $200,000. The existing Fishing Training Institute and the South-east Asia Fisheries Research Centre at Changi will need $138,600 for additional facilities. Among agricultural projects, an Agricultural Statistics Unit will be set up at a cost of $150,000. The Unit will carry out census and surveys on primary production in Singapore. The Factory Farming Pilot Scheme, the Hydroponics Farming Scheme and the Intensive Farm Improvement Schemes are all continuing projects for which $201,600 will be provided. A sum of $205,000 is also required for the acquisition and preparation of land for the expansion of the Sembawang Research Station.

The Ministry of Defence will need $100 million, mostly for works and buildings and land acquisition, to, accommodate the expanded defence units.

The Ministry of Communications is allocated a total provision of $29.2 million for the development of facilities in civil aviation, telecommunications, postal and meteorological services.

Development in Civil Aviation will require an estimated sum of $14.6 million. Intermediate airport development proposals at a total cost of $106.2 million will be implemented to provide additional facilities at Paya Lebar International Airport. These proposals, for which an Asian Development Bank loan of $62.10 million has been obtained, will be implemented over a period of five years and will include a new passenger terminal building with additional parking aprons, a modern freight terminal and a hangar large enough to take in aircraft like the Boeing 747s. The runway will be extended from the existing I 1,000 feet to 13,200 feet. Advanced navigational aids, including radar equipment, will be installed at the Airport. The fire services will also be upgraded to meet the highest international standards. An amount of $7.5 million is required to get these projects off the ground. Meanwhile, existing facilities at Paya Lebar Airport will be improved to meet immediate demands. The present passenger terminal, which is being redeveloped at a cost of $6.4 million, will be completed by September 1971. The improved terminal building will be able to cope with passenger traffic generated by the larger jets. Improvement to the parking aprons and taxi-ways is to be completed by June 1971. With these immediate improvements, Paya Lebar Airport will be able to handle the increasing air traffic growth until 1975-76 when the intermediate development proposals are scheduled to be completed.

Among the telecommunications projects, a major scheme which will be completed this year is the Earth Satellite Station at Sentosa. A sum of $5.6 million is required for work to be completed. A sum of $3.2 million will be spent on telex development. These include the purchase of more teleprinters and ancillary equipment. To catch up with the heavy demands for these services, the national automatic telex exchange will provide a total of 1.200 lines by mid-1972, while the international semi-automatic telex exchange will have a capacity of 150 channels. To serve the needs of the off-shore oil industry, $400.00() will be spent to purchase radio transmitting and receiving equipment. As in previous years, contribution will be continued to be made to international projects such as the SEACOM (South-east Asia Communications Cable) project and the International Telecommunications Satellite Consortium. The total cost of providing all these telecommunication services is expected to be $12.4 million.

Other proposals under the Ministry of Communications include the setting up of the Motor Vehicle Inspection Centre at Sin Ming Road off Upper Thomson Road, for which $800,000 is required. The new Mass Transit Planning Unit to be set up for further investigation into the feasibility of a mass rapid transit system for Singapore, requires a sum of $500,000. The study will be carried out with U.N.D.P. (United Nations Development Programme) assistance.

The Ministry of Education will be provided with $27.17 million $8.97 million for General Education and $18.20 million for Technical Education. Expenditure on academic education involves mainly continuing projects. The new Raffles Institution at Grange Road, which is provided with a sum of $2.85 million, will be completed by the end of 1971. With the resiting of Raffles Institution, the development of its existing site for the proposed Raffles International Centre is expected to commence in early 1972. Another junior college will be erected on a 15-acre site on the reclaimed land at Siglap. For the initial works on this College, $500,000 is provided. A sum of $1 million is required as Government contribution for the construction of other junior colleges planned by private organisations.

For technical education, a sum of $5.41 million is provided for the further development of the vocational institutes, a technical institute and workshops in secondary schools. The proposed Singapore Technical Institute will require $1.8 million. This institute, situated in MacPherson Housing Estate, is expected to be completed towards the end of 1971 and will have facilities to train craft-technicians for Singapore. The proposed building will also house the Technical Teachers' Training Department.

Emphasis on technical education will be extended to the institutions of higher learning. Provision of $1.60 million is' being made for the purchase of equipment for the Faculties of Engineering and Architecture and Building at the University of Singapore. Expansion and resiting of the Singapore Polytechnic at Dover Road is now under way. This new campus, on completion by 1973 - 74, will provide for an enrolment of up to 10,000 students. An amount of $6.0 million is provided for this development in 1971-72.

The expansion of Ngee Ann Technical College will take place during the next three to four years. The whole expansion for which an Asian Development Bank loan has been obtained will cost some $10.5 million. It will increase the enrolment capacity to 3,000 students. A sum of $2.2 million is required in 1971--72 for this expansion. An additional sum of $468,000 is provided for the purchase of equipment for the Mechanical Engineering and Industrial Electronics Departments of the College.

A sum of $1.25 million is required for the completion of the Hotel and Catering Training Centre. The proposed centre, which will also accommodate a hotel to be opened in 1971, will turn out some 1,000 trained personnel a year to meet the acute demand for hotel and catering workers in the Republic.

The Ministry of Health will spend $2.1 million for hospital services. The major project is the development of specialist units. This is a follow-up of the Report by the Committee on Medical Specialisation. A sum of $1.0 million will be required for building facilities and equipment. Other new projects include the proposed plan to centralise the kitchen and the Sterile Supply, Unit at Outram Road General Hospital and the establishment of a rehabilitation centre for paraplegics and hemiplegics at Tan Tock Seng Hospital. A total of $400,000 will be spent on improvement of wards and other services in various hospitals and clinics.

The Public Health Services will require $1.5 million to purchase more refuse collection vehicles to improve the public cleansing service. Another $300,000 will be spent to complete works on a new Environmental Health Depot for the Eastern Urban Division. The new depot will house the Public Cleansing and Vector Control Services vehicles. The present dental clinic at Outram Road General Hospital is to be extended to provide more space, and three dental clinics are proposed at various areas to meet the increasing demand for dental treatment for outpatients.

The Ministry of Culture, which is responsible for the Department of Broadcasting, the Government Printing Office and the Library Services, requires $3.4 million. A provision of $1.7 million is for the new Radio Studio and Offices Building, work on which is expected to commence in June 1971. When completed in early 1973, the building will replace the series of old buildings presently occupied by the Radio Section of the Department of Broadcasting. A sum of $153,300 will be spent to install modern fire-prevention equipment at Caldecott Hill T.V. Centre and several other transmitting stations. The Government Printing Department requires $95,300 for the purchase of printing machinery which will increase its printing capacity as well as inject greater efficiency into the Department. As a result of shortage of storage space, the shelving capacity of the National Library will be enlarged at a cost of $300,000. It is also proposed to build a library at Toa Payoh to cater for the large number of people in this densely built-up area and $400,000 is provided for work to start in 1971-72.

All the projects to be undertaken by the Ministry of Home Affairs are new ones except for the proposed improvement to the Police Academy at Thomson Road, for which $770,000 is provided for its completion. Among the new projects, a Divisional Headquarters will be built at Grange Road to replace the existing one at the junction of Orchard Road and Paterson Road. Another important project expected to be implemented in 1971-72 is the purchase of additional vehicles and equipment for greater operational efficiency of the Police Force. These will include motor cycles, patrol cars, scooters, outboard engines and ancillary communications equipment. A sum of $1.50 million has been provided for this. A marine substation, estimated to cost $445,000, will be constructed near the Jurong Landing Pier to replace the present substation at Tanjong Kling which is affected by the Jurong Town Corporation's industrial land development.

Under the Ministry of Science and Technology, two important development projects are expected to get off the ground in 1971 - 72: the resiting of the University of Singapore at Kent Ridge and the proposed Science Centre in Jurong. The total cost of these two projects is estimated at $100 million and $9 million respectively.

A University of Singapore Development Unit was set up in September 1970 to take charge of the planning and designing of the new University campus at Kent Ridge. This Unit has completed its preliminary studies and plans for the buildings earmarked for the first phase of the development. It is expected that more groundwork will have to be undertaken during 1971 before construction works can commence in early 1972. A sum of $1.24 million is provided for these preliminary expenses.

The proposed Science Centre will be situated on a 10-acre site in Jurong. The centre will be run by a board which was formed in 1970. Construction work on the centre has not commenced yet but earth works are scheduled to begin soon and building is expected to commence at the end of 1971. A sum of $1.78 million will be required for this purpose during 1971-72. The whole project will probably take two years to complete.

Construction works on the proposed subordinate Courts Building at Havelock Road is expected to start in mid-1971. The total cost of the project is estimated at $6.62 million. The building will house all existing subordinate Courts which are affected by road-widening and urban renewal projects.

The Ministry of Social Affairs is budgetting for a total expenditure of $1.01 million for the development of welfare services, prisons and fire brigade services in 1971-72. Before the end of this year the Junior Approved School is expected to be completed, part of the cost of which will be provided under the United Kingdom Financial Assistance Scheme. The original proposal for an open Prison at Ulu Bedok has been shelved pending the results of a Colombo Plan expert's study of the establishment of a penal institution. Improvement to other prisons will include the construction of a Cellular Block for Changi Female Prison to provide maximum security cells for female prisoners who are at present accommodated at Changi Remand Prison. The Prison Industries will be provided with a sum of $250,000 to purchase additional equipment. A creche will be built in the Jurong Industrial Estate for children of workers as a means of encouraging more married workers to live there. The building of a fire station at Jurong to meet the increasing need for fire services has been proposed for which a sum of $247,100 is provided for works to be carried out in 1971-72.

The Ministry of Finance will require $364.4 million, of which $150.0 million is for loans to statutory authorities, $198.6 million for loans to industrial and commercial enterprises, and $15.8 million for various Government development projects.

The Housing and Development Board, in implementing its Third Five-Year programme, will increase its target of building from 13,000 to 20,000 housing units per annum by 1975 and is expected in the present budget to incur a development expenditure of $159.0 million, of which $100.00 million will be in the form of loans from Government. A loan of $50 million is provided for the Jurong Town Corporation to finance its development projects, including the reclamation of swamp lands east of Jurong River, construction of marine channels and improvements to Jurong Port. More housing units and other social amenities will also be provided by the Corporation.

Of the loans provided for industrial and commercial enterprises, $96.0 million is intended as a further line of credit to the Development Bank of Singapore. Another loan of $67.9 million will be extended to Neptune Orient Lines Ltd, to enable the national shipping line to purchase more ships and tankers. Jurong Shipbuilders (Private) Ltd., a joint venture with the Singapore Government, Jurong Shipyard (Private) Ltd., and the Ishikawajima-Harima Heavy Industries Ltd., will be given a loan of $20.8 million for its shipbuilding programmes. The COMFORT Co-operative, established by the National Trades Union Congress to operate mini-buses and taxis, will be assisted with a loan of $4 million.

With regard to other development projects administered by the Finance Ministry, the development of the tourist industry will cost $13.5 million, of which $11.0 million will be spent on providing tourist amenities and infrastructure facilities at Sentosa. A sum of $2 million will be required for works on Jurong Park. An amount of $1.6 million is allocated for various economic and technical feasibility studies, including an air mapping survey, and studies on oil pollution off-shore.

Estimates of Revenue

I now turn to the subject of how all the expenditures can be financed. In the Estimates of Revenue for the next financial year, total receipts are expected to be $1,307.2 million, which represents an increase of 10.6 per cent over the actual receipts for 1970. All the increase is expected from the normal growth without any changes in existing taxes or the imposition of new taxes. While all the major sources of revenue are expected to perform better, it is anticipated that the annual increase may not be as buoyant as in the last two years in view of an expected slowing down of world trade and the massive run-down of the British Armed Forces in the Republic.

Direct Taxes

The four direct taxes, namely income tax, property tax, payroll tax and estate duty are expected to yield $430.8 million, which represents 32.9 per cent of the total revenue estimates for the next financial year.

Income tax, which forms a little over done-fifth of the total revenue, is expected to yield $280 million. This is $28.5 million higher than the previous year. As the income tax is based on the previous year's income, and 1970 has been a good year for the manufacturing, building and commercial sectors, the growth of revenue from this source will be maintained. The administrative capacity of the Inland Revenue Department has been improved with recruitments during the past year and the operations of the Anti-Evasion Unit during the course of the year.

The revenue from property tax is expected to increase by $16.6 million to $124.8 million, reflecting the rapid ,growth of the building industry.

The revenue estimate for payroll tax is $17 million. Here I have news which employers should welcome. The proceeds of the payroll tax will be used to lighten the burden of employers in two areas. Firstly, the proceeds will be used to compensate employers for the "make-up" pay when national servicemen are called up for their annual training exercises with the Singapore Armed Forces and they do not work in their factories and offices. Secondly, it is proposed to allow reimbursements to industrialists for approved training or apprenticeship schemes in skills, of which there is a critical shortage in the Republic. Details of the approved schemes will be worked out by the Economic Development Board and the Ministry of Education.

Indirect Taxes

The revenue estimate from indirect taxes is $385.2 million, which represents 29.5 per cent of the total estimated revenue for the next financial year.

The transport sector is expected to yield $16 million more next year than the previous year, consisting of $2.8 million from road tax, $3.9 million from special tax on diesel vehicles, $2.9 million from ad valorem registration fees, $3 million from petrol, $2.5 million from import duty, and $0.9 million from passenger vehicles seating fees. The other increases are expected from tax on Public Utilities Board bills ($2.4 million), tax on Singapore Telephone Board bills ($0.9 million) and Customs duty on sugar ($1.3 million).

The estimates show a decline in the revenue from Customs duty on liquors and tobacco, two of the oldest sources of revenue. In the case of liquors, the expected decline is due to the large stocks being available arising from speculative releases in the first quarter and the last quarter of 1970. If the ban on advertisements of cigarettes and smoking of cigarettes in designated places has the expected salutary effects, the revenue from Customs duty on tobacco will decline.

Other Sources

The sale of goods and services by Government departments will yield $10.1 million more, consisting of $5.4 million from the Telecommunications Department, $1.9 million from the Postal Department and $2.8 million from other departments. Regulatory charges (administrative fees) are expected to yield $19.1 million more; interests and dividends are expected to yield $9.9 million more; stamp duty is expected to yield $4 million more than last year.

The estimates show a decline in the revenue from land sales and premium by $15.4 million and $8.2 million from Japanese Special Aid as compared with the previous year.

On existing taxation, therefore, the revenue yield from all these sources will be $1,307.2 million. Since we have planned for an expenditure of $1,306.8 million on current account, there will be a small surplus of $0.4 million, even after taking into consideration a contribution of $80 million to the Development Fund for expenditure on development account.

The Development Estimates for the financial year 1971 - 72 provide for a total expenditure of $636 million, which, as Table VIII indicates, is expected to be financed largely from domestic loans amounting to $250 million. This is expected as usual to come mainly from the Central Provident Fund. The appropriation from current revenue already mentioned of $80 million and debt service repayments of $115 million added to the $250 million loan will together total $445 million, leaving a balance of $191 million. Part of this can come from external loans, interest and other receipts totalling some $91 million. If all disbursements take up the full provisions, which is unlikely, the overall deficit will be about $100 million. This can be financed, if necessary, by new taxation or borrowing or by running down the balances in the Development Fund which it is estimated will stand at about $500 million at the beginning of the financial year 1971-72.

The question which now remains to be considered is whether, on current needs both for ordinary and development expenditures, new taxation or higher rates on existing taxation should be imposed. The Government's policy of promoting fast economic development has paid off. Existing tax yields have increased so that they have been sufficient in recent years to meet the needs for ordinary expenditures. A modest contribution to development expenditures has also been possible.

Development expenditure requests, however, have been increasing in size from year to year. Some of the needs in the coming years for projects like the Mass Rapid Transit System or for renewal of urban areas will be for sums beyond anything we have been accustomed so far to consider. The balances remaining in the Development Fund and the present sources for replenishing these balances are unlikely to be sufficient to meet all these future needs. Some of the development projects are, however, self-financing or can assist in producing better economic returns on other projects. For such projects, borrowing would be appropriate and public authorities or companies concerned could probably tap additional sources of funds such as suppliers' credits or borrowing in international markets. The Government itself can borrow more externally. Singapore's public debt at present stands at only $1,168 million and sinking funds are available to offset these by some $438 million. Our debt servicing charges at $181 million represent only 13.7 per cent of our total ordinary budget appropriation, or 3.7 per cent of our Gross Domestic Product. Our credit worthiness is, therefore, high. When opportunity occurs, it will be our intention to float loans in the international money markets. New taxation or higher rates on existing taxes appear to be unnecessary.

For 1971, therefore, unless tax yields fall very considerably below our expectations or sudden large calls for contingency financing are made, no new measures are being proposed.

I must, however, add that from time to time over the year, it may still be necessary to remove anomalies in taxation, improve tax procedures or, where a case is clearly established, accord protection in the earlier stages of industry being established.

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, 1971 to 31st March, 1972." In accordance with paragraph (1) of Standing Order No. 84, the debate now stands adjourned.

Mr Hon, debate to be resumed what day?

Mr Hon Sui Sen: On 17th March, 1971.

Mr Speaker: So be it.