PRICE INCREASES OF DAILY NECESSITIES

Mr Ang Nam Piau asked the Minister for Finance if he will take steps to curb increases in the prices of daily necessities.

The Minister of State for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, the question of the increase in prices was thoroughly aired by Members and adequately answered by the Minister for Finance during the budget debate two days ago, on the 17th of this month.

The Government is keenly interested in stable prices and will do everything within its power to see that there is no unwarranted increase in the price of any goods, especially of daily necessities. But there are limitations to what we can do. This is because we are an open economy and we import most of our goods which are, therefore, subject to fluctuations in world prices.

I take it that daily necessities mean food, housing and clothing. Let us examine these three broad groups to find out whether there is any rise in their prices and the reasons for such rise.

On food, we are self-sufficient only in pork, poultry and eggs; the rest of our foodstuffs like rice, sugar, fish, fresh vegetables, are imported. The price of sugar was recently increased by three cents per kati, but this was because the world price of raw sugar went up sharply --- something over which we have no control. There has, however, been a fall in the price of rice recently by some five cents a kati. The statistics gathered by the Statistics Department indicate that 100 per cent Siam rice was, on the average, 41 cents a kati in January 1970 and was only 36 cents a kati in January this year. Because rice forms a large part of Our budget on foodstuffs, the fall in the price of rice should more than outweigh the rise in the price of sugar and some other items like bread.

As Members know, foodstuffs are also subject to seasonal fluctuations, especially items like fish and fresh vegetables. The statistics seem to indicate that there is always a rise in the price of foodstuffs at the beginning of the year but that the price will go back to normal towards the middle of the year. This may be because of festive seasons, like the Chinese New Year and Han Raya, which normally occur at the beginning of the year.

On housing, the statistics collected by the Statistics Department show an increase of 1.4 points in 1970 over 1969. This increase is attributed to increases in the Public Utilities Board charges and the tax on P.U.B, bills. There is, of course, a very sharp rise in rentals for middle-class property. But this should not affect the working class who are well looked after by the Housing and Development Board.

In the clothing group, the increase is really very slight and has occurred in the sectors of clothing material and made-up garments. A large portion of these two items is still imported and as long as the sophisticated consumers here still have a preference for imported materials and made-up garments over the locally-manufactured ones, then they must be ready to pay more for them in view of the customs duty imposed on them.

It is hoped that if we continue to run an efficient port and the ancillary services and maintain a highly competitive market with the absence of monopolies, we will continue to buy the best goods at the cheapest possible price from any part of the world and thus keep to the very minimum any possible increase in the cost of living.

So far, we have been able, in spite of our open economy, and in spite of the rising trend in world prices, to keep our cost of living relatively stable. Our Consumer Price Index showed that there was only a 0.4 point increase in 1970 over 1969.

For comparative purposes, I have handed out a table* containing a cost-of-living index compiled by the United Nations on eight countries. It may be interesting for Members to note that the cost of living in Singapore has risen only 8.5 points in seven years, from 100 points in 1963, as the base year, to 108.5 in July 1970. And of the eight countries shown, Singapore has the lowest rate of increase. The next lowest increase, for Australia, is 23.5 points.

(*See Appendix, cols. 971-2.) COST OF LIVING INDEX (Cols 971 - 972)

Mr N. Govindasamy (Telok Blangah): Mr Speaker, Sir, can the Minister of State inform this House what steps did his Ministry take when the Bakers' Association recently decided to increase the price of bread when the price of the basic commodity for bread, that is, flour, did not go up?

Mr Tang See Chim: I can inform the Member that the Trade Division of the Ministry of Finance had a discussion with the Association of Bakers, and from information supplied to the Trade Division. It was shown that there had been a rise in the price of flour in the sense that the rebate for wholesalers was withdrawn with effect from the beginning of this month.

Mr P. Govindaswamy (Anson): Mr Speaker. Sir, the Minister of State for Finance has mentioned the increase in the cost of living in Australia, Canada, France, Hong Kong and some other places. However, can he tell us how much is the increase in the salaries in those countries?

Mr Tang See Chim: I have no idea about that, Sir. Perhaps the Member could quote some statistics on this point and then we could have a comparison. But if the Member wants statistics, I am prepared to collect them and send them to him.

Mr P. Govindaswamy: Mr Speaker, Sir, that is not the question. When the Minister of State received the information from these foreign countries, he would have received information on the increase of salaries at the same time.

Mr Speaker: Is this a supplementary question?

Mr Seah Mui Kok (Bukit Ho Swee): Mr Speaker, Sir, we were told by the Minister of State for Finance that the Bakers' Association had discussions with his Ministry and, as a result, approval was granted for the increase in the price of bread. It seems that the approval was very easily given. I hope if the N.T.U.C, or the unions approach the Ministry of Finance for a high cost-of-living allowance, perhaps that can be granted as well.

Mr Speaker: Is that your supplementary question, Mr Seah? Can the Minister answer?

Mr Tang See Chim: No approval was given. Sir.

Dr Augustine H. H. Tan (Whampoa): Mr Speaker, Sir, two supplementary questions. First, is the Minister of State aware that the imposition of customs duties, in addition to raising the prices of imported goods, also leads to rises in the prices of domestically produced goods even though they may not rise to the same extent?

Secondly, has the Minister forgotten the debate we had in the last two or three days on the question of the use of weights in the construction of the cost-of-living index?

Mr Tang See Chim: What the Member for Whampoa said - that if we put a tax on imported goods, the prices of locally-manufactured goods could also rise - that could be true, yes. But with locally-made goods, we are in a better position to control the price level, whereas with imported goods we are not so able.

On the second question, the Minister for Finance, in replying to Members on the budget debate, did say that he would consider a survey and see whether the weighting for the present price index should be adjusted.

Dr Augustine Tan: Sir, is the Minister of State for Finance aware that he has not really answered both my questions?

Mr Tang See Chim: Sir, I think I have answered adequately.

Mr N. Govindasamy: Mr Speaker, Sir, the Minister of State has mentioned that where locally-produced goods are concerned, his Ministry is able to control prices. Can he give me one instance where his Ministry is able to control the price of any commodity at all in Singapore?

Mr Tang See Chim: Sir, the prices of sugar and petroleum are controlled, for example. Perhaps the Member can tell me what are the goods for which there has been an unwarranted rise in their prices.

An hon. Member: Bread!