ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Resumption of Motion.

Mr Hon Sui Sen: Mr Speaker, Sir, just before the tea break, I was saying that arrangements with three other international companies for similar joint industry/Government training centres-are also expected to be concluded within the next three months. These centres, will be located either within the premises, of other vocational institutes or adjacent to the plants themselves. The total annual intake of these three centres will initially be 268 trainees. Under the-scheme, the Government will contribute 50 per cent of training costs provided the organisation assisted, trains twice-its requirements and releases 50 per cent, of the trainees to Government for upgrading skills. In this way, we hope to produce sufficient numbers of well-trained persons. As for immigration, our procedures are undergoing streamlining to ensure that persons who can contribute to the economy are not turned, away.

As regards science and technology,, the aim is to promote practical research and development both at the universities-and by international and multi-national companies. The Universities of Singapore and Nanyang as well as the Polytechnic-and Ngee Ann Technical College will, under our strategy have a major part to play in research and development. We will further develop the Singapore Institute of Standards and Industrial Research. We are now considering the setting up of a Centre for Applied Research under the auspices of the Ministry of Science and Technology whereby the best of our scholars from the institutions of higher learning and private industry can be drawn upon to, provide research and consultancy services, both within and outside Singapore. Through selective use of taxation, we hope, too, to encourage international companies to conduct their research and development here.

As to infrastructure, much has already been accomplished in the last few years. Under our development plan, further improvement and expansion of infrastructure for efficient distribution of goods and services from Singapore is vital. The transport and communications sector in our economy will have to be strengthened. We have already taken steps in this direction. Capital expenditure for port development will amount to $153 million in 1972 and this will be spent on development of containerizations at the East Lagoon, warehousing at Pasir Panjang and the Ocean Terminal at Tanjong Pagar. With regard to air communications, Mercury Singapore Airlines will be taking over, on payment, substantial assets and facilities from Malaysia-Singapore Airlines and will continue to expand and maintain their services. We are also looking into improvements and developments of the airports and related services. As regards transportation on land, a feasibility study on a Mass Rapid Transport System will be undertaken shortly with the United Nations Development Programme and World Bank assistance. It is hoped that the study will provide the guidelines in solving the increasing congestion on our roads. In the electronics and telecommunications sector, an autonomous statutory corporation will be set up this year to take over the functions of the Telecommunications Department, A 10-year programme has been formulated to meet the Republic's telecommunications requirements, particularly for telex machines and telex services. Further - development in the telephone services is also envisaged.

Under the development plan, emphasis will be placed on developing tourist infrastructure with the aim of developing Singapore into an "entrepot" centre for tourism, and as a centre for regional - and international conventions. The development of Sentosa will be the major undertaking under this heading. Over the coming 10 years, 31 Government projects and eight projects by the private sector are planned for the island. A corporation to be known as the Sentosa Development Corporation will be established shortly to undertake the entire development and to turn Sentosa into a resort of quality in a tropical setting. As for the promotion of conventions, the Tourist Promotion Board has set up a special conventions unit specifically for this purpose.

Our plan to develop as a centre for brain services will require the examination and modification of present taxation laws. This will help the overall development of Singapore as a financial and monetary centre. A committee of taxation experts has already been convened to look into the possibility of using tax measures to attract cram service industries and industries with very high-level technology and to promote the growth of a regional money market.

The present promotion programme of the Economic Development Board is geared to attracting high-level technology industries. This will be indemnified. Besides this, we are promoting a! types of brain services in Singapore -engineering and consultancy, marketing, physical planning and development, international sales and servicing, education, medicine and especially, banking and financing services. Under the programme, Singapore wilt develop into an international banking and financial centre. Hence, measures are being introduced to stimulate our banking sector and the capital and money markets. To bring international participation in our financial centre, we have approved a number of licence for foreign banks to operate in Singapore and will be liberalising our exchange controls further.

These elements comprise our development plan for the l970s. In broad terms the goal is to transform Singapore within ten years, at an economic development growth rate of 15 per cent per annum, into a regional centre for brain services and brain service industries. Success will depend upon the quality of our people, their capacity to improve themselves through education, training and experience. This is an expensive process which can only be carried out if population growth is kept down to almost Zero Population Growth. Then we can the better afford to attract expertise and technology from outside.

Budget Estimates 1972-73

Let me now turn to the main business of the Budget proposals for the financial year 1972-73.

The detailed estimates are contained in two documents*(*Papers Cmd. 3 and 4 of 1972.) - the "Estimates of Revenue and Expenditure" and the "Development Estimates". As in past years, a Treasury Memorandum+(+Paper Misc. 1 of 1972.) on each of the Estimates with detailed explanatory notes on the various Heads of Expenditure has also been circulated to Members. It is unnecessary therefore for me to do more than make general observations on those areas of expenditure which involve changes in policy and comment on broad policy measures for greater efficiency and effectiveness in government administration.

The changing needs of the economy in the 1970s will require the Government to reappraise, from time to time, the policies and priorities for allocation of funds as well as manpower resources to the various sectors. Further, there is a need also to review our administrative machinery including the present system of Government budgeting and financial control. The emphasis in the present system has hitherto been on the balancing of the budget and the diversion of more of our resources towards economic development and, latterly, also towards defence. This system has served us well in the 1960s during the initial phases of our economic development. In the l970s, however, with rising labour costs in a situation of full employment, the budget should be used also to effect mechanisation and introduce other labour-saving methods, and generally to modernise and improve Government administration. Set up originally to provide minimal services at least cost, many of the departments are not equipped for developmental activities or for active interventionist policies and are unable to cope with the increasing new demands for their services. During the current financial year, therefore, a number of organisational and structural changes have been introduced in several Ministries.

In addition, the following statutory authorities have been or are in the process of being set up by legislation -the National Sports Promotion Board, the National Stadium Corporation, the National Statistical Commission, the Post Office Savings Bank Board, the Telecommunication Authority of Singapore and the Commercial and Industrial Security Corporation.

Various measures have also been introduced for the general improvement of the terms and conditions of service in the Civil Service. A systematic reappraisal has been made of the terms and conditions of service of various services, notably the Technical Services, the Education Service and the Police Service.

There has also been a general reorganisation of the Administrative Service under which, in future, all recruits will be appointed as Cadet Trainees for a period of two years during which time they will be given specific postings covering different spheres of Government administration and operations. A scheme for the training of Medical Officers in the various medical specialities has also been introduced. Provisions for overseas scholarships, training and study awards have also been substantially increased in the new financial year.

All these measures are designed to bring about not only an improvement in the quality of Civil Service personnel, but also to ensure a permanent Service with a lower turnover of experienced staff.

However, in an expanding economy and with a manufacturing sector, particularly, growing in size and complexity, managerial talent is in short supply. Handsome inducements are often offered to attract the best. Consequently, what appear to be fresher and greener pastures often tempt some men of experience and promise from the Civil Service to the private sector. Whilst some mobility must be expected, the public service is already suffering from an acute shortage of experienced administrators and professional cadres, and the continuing loss of trained men must be checked.

The Government is aware that one difficulty in retaining them is due to the widening gap in pay between the private and public sector for men of comparable grades. Our public service is widely recognised, and rightly so, as second to none in this part of the world. If our economic growth has been sustained in recent years at an unprecedented high level, if our economy today is buoyant and full employment is a reality, a major part of these achievements can be attributed to our efficient public service. If we do not wish to see a collapse of this service, an improvement in terms and conditions of employment must be made. At the very least, therefore, we must do what we can to prevent the gap in pay from widening. The payment of a non-pensionable annual allowance which the Prime Minister has already announced two days ago is the first step towards this end.

In addition to this allowance, it is intended that the process of rationalisation and restructuring of the salary scales of the Civil Service will continue. Some of the disparity in wages between daily-rated skilled workers in the private sector and in Government has been under examination for some time by a Review Committee on Daily-Rated Employment. We shall effect necessary adjustments in wages, taking into account the - annual allowances - already -announced. The Public Service Commission will, moreover, continue to conduct regular and frequent promotion exercises in order to ensure that the brightest and most promising officers will receive accelerated promotion.

Now, the day-to-day operations of Government. The Government intends to gradually introduce more modern and efficient systems and methods of operation. Greater emphasis will be placed on mechanisation. Budgetary support has been given for the increased use of office machines and other mechanical aids in the day-to-day operations. Increases in personnel have been kept to the minimum. Consideration has also been given to the computerisation of operations of Government Departments. A Management Services Unit has been formed in the Treasury which will systematically study Government Ministries and Departments and will suggest improvements in organisation and methods. It will do this in co-ordination with the Electronic Data Processing Unit in the Ministry of Finance which has been reorganised and reconstituted as the Computer Services Department to cope with the increasing demands for computerisation from all Ministries. Where necessary, existing computer facilities will be further augmented.

The present overall system of budgeting is also being reviewed. Some of the more useful and desirable features of what is known as the Planning, Programming Budgeting System may be introduced. The P.P.B.S, provides a more systematic means of assessing requirements and evaluating performance in terms of effectiveness and costs. A feasibility study has been made. The service of a U.N. Technical Assistance Expert is being sought to work out a programme of implementation in stages.

Ordinary Estimates of Expenditure

The overall Budget provision for Recurrent Expenditure for 1972-73 is $1,448.69 million which is $141.88 million or 10 per cent more than the provision for 1971-72. In comparison with the estimated revised expenditure for 1971-72, the provision is only 6.1 per cent higher.

Of the total provision, 38.9 per cent is for Defence and Internal Security, 26.6 per cent for Social Services, 15.1 per cent for Statutory Expenditure and 7.8 per cent for Economic Services. The allocation for Defence has increased by 16.5 per cent compared to the provision for 1971-72 while that for Social Services has increased by 12 per cent. The total allocation for Economic Services does not show any significant change. The somewhat lower figure of $113.14 million as compared to $131.42 million for 1971-72 for Economic Services is due to the deletion of the provision of $19.4 million for the Telecommunications Department which is to become a statutory authority early in the new financial year.

The main Heads of Expenditure which have been allotted sizable increases in funds are: Defence ($72.8 million), Education ($18.7 million), Health ($16.2 million), Home Affairs ($7.1 million) and National Development ($3.3 million). There has been an increase of $12.9 million for Statutory Expenditure and the Contribution to the Development Fund has also been increased by $20 million.

At this stage, I would like to mention some of the significant changes in the allocation to the major Ministries resulting from increases in the level of activity.

Ministry of Labour

A proper assessment of our man-power needs and resources and the formulation of an effective plan for the optimum utilisation of available labour will need to be made by the Labour Ministry. A general revision of its scope and functions is now in progress. For the coming year, additional provisions have been entered for the setting up of regional offices in Alexandra, Toa Payoh, St. Michael's Estate and Jurong Industrial Estate. The Factory Inspectorate will also be expanded and its staff augmented for more effective supervision of the factories and establishments to ensure compliance with industrial safety regulations. The Industrial Health Unit at present shown under the Ministry of Health would also be transferred in the new financial year to the Ministry of Labour.

A study has been made by the newly appointed Labour Adviser to the Ministry of the scope and functions of the Labour Exchange and his recommendations that the Labour Exchange should be expanded to play a more effective role in the deployment and utilisation of labour force as well as in the provision of labour market information and vocational guidance have been accepted in principle and will be implemented during the course of the coming year.

Ministry of Communications

The main Departments under the Ministry of Communications where significant changes have been made are the Postal Department, the Registry of Vehicles and the Telecommunications Department. A general review of the overall working of the Postal Department has been undertaken with the assistance of the National Productivity Centre and a series of studies on the reorganisation and modernisation of the Postal Services has been completed. The recommendations of the initial reports for the mechanisation of the delivery services, and the use of mechanised means for the handling of mail and parcels as well as the resiting of the mail handling sections have been partly implemented in 1971-72 and will be completed in 1972-73.

In the Registry of Vehicles, the work of computerisation of drivers' licences has been completed and plans for the computerisation of motor vehicles' records have been finalised and will be implemented in the new financial year. Although the cost of computerisation and conversion of records is estimated at $206,650, this will result in some saving of manpower and the provision of a more efficient service to the public.

The Telecommunications Department has been reorganised and will be converted into a statutory authority on 1st April, 1972. Ministry of National Development

The main changes in the allocation for the Ministry of National Development have been the result of the expansion in the functions of the Primary Production Department and the increase in area of responsibility of the Public Works Department. The Primary Production Department has embarked on a scheme for farm licensing and control of farm structures as part of its overall programme for more intensive agricultural development and as a means of farm sanitation and pollution control in the rural areas.

The Public Works Department has now taken over the responsibility for the maintenance of the Jurong Industrial Water Treatment Works and the three aerodromes at Changi, Seletar and Tengah. As a result of the takeover of the areas previously occupied by the British Armed Forces, there has been a substantial increase in the work of upkeep and maintenance of grounds and buildings and in maintenance costs. The Sewerage Branch has commissioned three new sewerage pumping stations and has expanded the treatment works at Serangoon. The Parks and Trees Branch will also be expanding its area of activity with the opening up of new parks and wooded areas.

Ministry of Education

The provision for the Ministry of Education has increased from $191.03 million for 1971-72 to $209.7 million for the coming year. The main changes of significance are the restructuring of the Education Service, the continued expansion of the technical stream of education and the proposed separation of the functions of vocational and industrial training from that of the general stream of school education.

In order to provide an efficient and co-ordinated programme of training of technical personnel for the industries, it is proposed to set up ,in the new financial year the Industrial Training Board, with the responsibility for all matters relating to industrial training and the administration of industrial training institutions including the vocational institutes and the industrial training centres. Greater emphasis will be placed on the upgrading of skills through apprenticeship schemes and joint industrial training programmes particularly for skills relating to precision industries.

Ministry of Health

Under the Ministry of Health, a total provision of $114.4 million has been made as compared to $98.2 million in 1971-72. Of the increase of $16.2 million, $7.6 million has been allotted to the Hospitals Division and $3.6 million to the Public Health Division.

The major increases in the Hospitals Division are associated with the implementation of the first phase of fostering medical specialities, the general improvement of Medical Services and a gradual expansion in the services provided by the Alexandra Hospital and the Sembawang Hospital which were recently taken over from the British Services. The training of Medical Officers in the various specialities has also been stepped up and an annual complement of about 50 doctors will undergo a two-year training in selected specialities.

Under the Public Health Division, the general emphasis is on the provisions of improved environmental health services and the extension of the coverage of such services to all parts of the Republic including areas formerly occupied by the British Services. The Public Health Engineering Branch will also undergo some fundamental reorganisation and the scope of its work will be extended to cover additional areas of environmental control. The Public Cleansing Service has been provided with additional funds so as to extend its coverage to the former British Armed Forces areas. Home Affairs

The Ministry of Home Affairs is now responsible for the additional Departments of the Singapore Citizenship Registry, the National Registration Office and the Registry of Births and Deaths which were formerly under the Ministry of Labour. The Prisons Department will also be transferred to the Ministry of Home Affairs in the new year. Further, a reorganisation of the Police Force, after the Lee Soo Ann Report, has been undertaken. This will improve the quality of the rank and file of the Police Force. There will also be a substantial increase in the use of modern methods and techniques for combating crime and an increasing use of vehicles, radio and electronic equipment for the routine patrol system.

The Vigilante Corps has also been expanded to provide for the establishment of a Civil Defence Organisation and the Auxiliary Fire Fighting Service and to undertake the training of National Servicemen in these disciplines.

Defence

Under the Ministry of Defence, the increase in the block provision for Armed Forces is based on the need to continue the build-up of the Services, particularity that of the Air Force and the Navy.

A general review is being undertaken of the administration of the Ministry. The aim is to provide a permanent corps of Administrative and Executive Officers to replace the military personnel now engaged in administrative duties and who could be better used in military functions.

Development Estimates

I now come to the Development Expenditure for 1972-73. A total amount of $750.77 million is provided as compared to $635.96 million and $442.59 million provided for 1971-72 and 1970-71 respectively.

The major portion of the provision for 1972-73 goes to the economic sector amounting to $342.23 million or 45.6 per cent of the total provision. Out of this, 35.4 per cent or $121.13 million is for direct expenditure by the various Ministries on development projects. The remainder is for extending loans to the statutory bodies and companies wholly or partly owned by the Government.

For the financial year 1972-73, the provision for direct expenditure on development projects in the economic sector is distributed as follows:- $ milllion Tourist Infrastructure Development 10.26 Transport and Communications 44.32 Land Development 64.90 Primary Production 1.90 ------ $ 121.13 ======

Work at Sentosa on the Golf Course,. Swimming Lagoon and Gun Museum are now well underway. The next financial year will see the development of the Coral and Shell Museum, the Open Air Theatre, the Cable Car Landing Plaza and other amenities. An amount of $10.26 million is provided to finance the development of Sentosa.

In transport and communications, a major development project is the expansion of the Singapore Airport. Since its inception in 1955, the Singapore Airport has seen tremendous increases both in number of passengers and volume of freight. To cater for the rapidly increasing number of passengers and volume of freight the Airport has to handle, a development plan has been formulated. The immediate phase involves the extension and renovation of the existing passenger terminal building. It has now been completed. In the intermediate phase, a new passenger terminal, a freight terminal, a Boeing hangar, the extension of the runway, new parking aprons and various navigational and landing aids will be provided. This phase is scheduled to be completed by 1976. It will require a sum of $105 million. An Asian Development Bank Loan of $60 million has already been obtained.

The increasing volume of vehicular traffic is a never-ending problem, not -only of traffic flow, but also of availability of parking space particularly in the city. This necessitates improvements to existing roads and construction of new roads and car parks. Thus, a substantial provision is made for the vote on Transport and Communications for 1972-73.

Land development constitutes a sizable part of direct expenditure by Government Ministries in the economic-sector. With limited land resources, it is imperative that we should put them to utmost use. Part of the provision for land development is for the acquisition of land required in connection with various public development projects. Our major reclamation scheme, the East Coast Foreshore Reclamation Scheme, is now in its third phase of development. We seek to build what we have not been endowed with by Nature.

Loans to statutory boards falling under the economic sector amount to $221.10 million for 1972-73. These comprise mainly loans to the Jurong Town Corporation, the Public Utilities Board, the Singapore Telephone Board and to industrial and commercial enterprises wholly or partly owned by the Government. The provision in respect of this -for 1971-72 was $248.55 million. Loans for industrial and commercial enterprises, however, show a reduction amounting to $96.10 million for 1972-73 as compared to $198.55 million for 1971-72. This is attributable to the fact that as more of these enterprises become well established, they are better able to draw upon their own resources and require less external finance for their development programmes.

A total sum of $263.33 million is provided for the social sector as compared with $161.74 million provided for 1971-72. Of this provision of $263.33 million for 1972-73, $77.33 million is for direct expenditure on development projects and $186.00 million is for loans to statutory boards in the social sector, including $180.00 million for the Housing and Development Board.

The distribution of $77.33 million for direct expenditure by Government Ministries is as follows:- $ million Education 23.95 Health 12.71 Sewerage 20.05 Community & Welfare Services 20.62 -------- $ 77.33 ========

Though the provision for Education has dropped slightly from $27.14 million for 1971-72 to $23.95 million for 1972-73, emphasis continues to be placed on expanding the level of technical and vocational education in order to meet the increasing demand for skilled, technical and professional manpower. The past few years have seen the restructuring of secondary education towards technical and vocational education. This emphasis will be extended to education at the tertiary level. Thus a great portion of this year's provision is for development of the new University of Singapore campus at Kent Ridge in Pasir Panjang, development of the new campus for the Polytechnic, and expansion at the Nanyang University and the Ngee Ann Technical College.

The provision for Health projects has increased by more than two-fold from $5.57 million in 1971-72 to $12.71 million for 1972-73. The relatively low level of expenditure for Health development projects in the past few years has reflected the emphasis on industrialisation and defence. The 1972-73 provision will cater for more sophisticated health services as well as improved environmental health services. The Government has decided to provide highly-skilled medical specialists with the necessary facilities to make Singapore into a medical specialities centre in this part of the world. The first phase of this programme is the implementation of the interim development of four medical specialised units, Nephrology, Neurosurgery, Cardio-Thoracic Surgery, and Plastic and Reconstructive Surgery. Work on them will be completed in two years.

Funds are also provided under Public Health for a pilot project for mechanisation of street cleansing operations and for additional vehicles required to provide efficient refuse collection services. A considerable sum is also being provided to develop hawker -centres and markets to resite the unhygienic stalls and markets now proliferating in various places in the city.

The development of sewerage facilities in 1972-73 accounts for $20.05 million. Modern sanitation and better-sewerage facilities are necessary for better environmental health to check pollution and increase our water resources. The system will be extended throughout Singapore as soon as possible.

Government has, under the Garden `City Campaign for the past two years, developed a great number of open spaces into beautiful parks and spots. Trees and shrubs have been planted .along the main thoroughfares. Government is continuing its efforts in its Garden City Campaign for which a sum of $6.30 million is earmarked for 1972-73. This includes the park developments at Mount Faber, Central Park and East Coast Park.

The provision for urban and rural-services has increased to $3.25 million this year, as compared with $2.48 million for 1971-72. More funds are required in 1972-73 so as to provide kampong roads, street lighting, drainage and extension of public utilities supply in the rural areas. An interesting project of immense educational value is the construction of the proposed Science Centre at Jurong. This Centre will be opened throughout the year and should stimulate and educate our students in the science and technical streams.

The greater portion of the loans to the statutory boards in the social sector goes to the Housing and Development Board. The Board has embarked on its Five-Year Building Programme with the target of building 100,000 units of flats during the plan period. For 1972-73, a total of 20,000 housing units is expected to be built. To achieve this target, an amount of $180 million has been set aside as a loan to the Board in 1972-73.

The provision for defence and public administration amounts to $145.21 million, of which $11.23 million is for public administration. We must defend what we have built.

The main share of the provision for public administration goes to the development of the Subordinate Courts New Building at Havelock Road, and improvements to other Government buildings.

Estimates of Revenue

I come now to the Estimates of Revenue. Without additional taxation, or changes in present rates, the estimated revenue for the financial year 1972-73 is $1,449.1 million. This represents an overall increase of $142.1 million or 10.9 per cent over the estimated revenue of $1,307.2 million for 1971-72.

The estimated revenue yield from direct taxes is $537.7 million which is an increase of $106.7 million or 22.5 per cent over the estimated revenue for 197 1-72. The main items in this category are income tax and property tax. The yield from income tax is expected to increase by about $70.0 million and from property tax by $31.7 million. This represents an increase of about 25 per cent over the estimated revenue for 1971-72, and is largely the result of the satisfactory growth rate of the economy by about 14 per cent in 1971.

Revenue earnings from indirect taxes and other taxes on outlay are expected to bring in an additional yield of $26.0 million. The main items included under this category are customs and excise duties and revenues from motor vehicles' registration and licensing fees. Revenue from customs duties is expected to yield an additional amount of $18 million or an increase of 6.4 per cent over the estimated figure for 1971-72. The growth in earnings from this group of items is dependent on the overall growth in consumption of petroleum, liquor and cigarettes, and reflects largely normal growth rates. Protective import duties which accounted for part of the increases in previous years have declined in importance due to the revision of duties and the removal of tariffs on many items.

The other main sources of revenue include sales of goods and services by Government Departments, sales of land and land premium, income from property and from investments, and earnings from currency surplus. This group of items is expected to bring in some incises in revenue in the new financial year. The changes in yields from these intern, however, vary significantly from item to item and are dependent on actual plans of operations rather than on normal growth patterns. The main chances affecting the yield from "Other Sources" are due to variations in the group of items covered. The main items that have been excluded from this category are receipts from Telecommunications Services and Japanese Special Aid, both of which accounted for the substantial amount of $54 million in revenue last year. The decline in revenue due to this has been partly compensated by an increase in revenue from interest on investments and currency surplus which will jointly yield an additional revenue of about $33.1 million in 1972-73.

Tax Changes

Finally, we have to consider the question of what additional taxation should be imposed.

In the past, our tax policy has been very simply the stimulation of rapid economic growth to lay a wider tax base which would provide increased revenue sufficiently to meet new requirements for Government expenditures. This has been almost completely successful. Since independence, we have had need, in our direct taxation, only in 1966 to increase the maximum rate of personal tax from 50 per cent to 55 per cent for incomes above $100,000. In indirect taxation, only four minor taxes were introduced and three existing ones were revised, these being duties on tobacco, beer, stout and samsu.

For the next financial year also, I propose to continue this policy. No new taxes are, therefore, being introduced. There will, however, be a number of changes which will assist Government's economic and social policies. They will be tax reliefs relating to the following:-

(1) stamp duty on certain negotiable certificates of deposits transacted through financial institutions:

(2) income tax allowance for earned income for low income salary earners;

(3) income tax on the imputed income of owner-occupied houses, other than toe largest homes;

(4) income tax deduction of expenditure on maintenance of gardens;

(5) estate duty on small estates;

(6) income tax depreciation allowance on expenditure by industries on antipollution devices.

Details of the tax reliefs are as follows: -

(1) Abolition of Stamp Duty on Negotiable Certificates of Deposits and Bills of Exchange

It is the Government's intention, as-part of the plan for assisting the development of Singapore into a regional financial centre, to promote a short-term money market. This is at present non-existent because the stamp duty on Bills of Exchange and Negotiable Certificates of Deposit is inordinately high. In the leading international financial centres, either there is no stamp duty, or the rates are nominal. I propose therefore to remove the stamp duty on Bills of Exchange, Negotiable Certificates of Deposit and allied forms of promissory notes which are transacted from or through banks. The expected reduction in revenue from such removal is estimated at $2.5 million per year, but it is hoped that it will be offset by returns in increased economic activities and in earnings of the financial institutions.

(2) Earned income Relief up to $1,000 under the Income Tax Act

At present, in addition to personal allowances, the Income Tax Act allow a taxpayer a deduction for earned income which is defined as including income from salaries, partnerships and other sources except income from capital such as rents, dividends and interest. This relief is, however, limited to 20 per cent of the earned income, and subject also to a maximum deduction of $1,000. For the small taxpayer earning less than $5,000 per annum, however, the maximum deduction is determined only by the first limit of 20 per cent of the earned income. I propose to remove this 20 per cent limit so that the deduction will be of full earned income subject only to the maximum deduction of $1,000. This will benefit about 33,000 taxpayers. The proposal will be effective from this year of assessment.

(3) Increase in the exemption from $6,000 to $12,000 in the Net Annual Value of owner-occupied residence for Income Tax purposes

The rapid progress of the economy has resulted in an escalation in prices of landed property, particularly in the last two to three years, which, in turn, has brought about a general increase in rentals of houses. Following these increases in rentals, the revaluation of the annual values of properties has been undertaken by the Property Tax Department, but has been the cause of much complaint by owner-occupiers, some of whom have claimed that it may soon become too expensive to live in their own houses! The reason is that although no additional Property Tax is payable by owner-occupiers, some of them have become liable to income tax on the imputed income taken as the net annual value of the house in excess of $6,000. (The net annual value of the house is derived by deducting property tax, maintenance cost and interest charged on mortgage loans from the annual value of the house.)

As it is the policy of the Government to encourage greater home-ownership in the Republic, it is proposed that the existing exemption of net annual value be increased from $6,000 o $12,000 for the purposes of income tax. Such exemption will give avoidance from payment of additional income tax to the large majority of owners who live in their own houses. Even the small minority who own and live in very large residences will enjoy a reduction in income tax which they can well afford to pay.

(4) Increase in the remission of income tax on cost of maintaining of garden

In 1970, the Government decided to remit income tax on expenditure up to $100 incurred by taxpayers for maintaining well kept gardens as part of the national campaign to make Singapore a clean and green city. This remission is confined to individuals; companies can already treat expenditure incurred on gardens like any other expense.

The Government spends considerable sums of money in planting trees, flowers and bushes along roads and in public places. The public has responded to the campaign and Government's example by improving their gardens through planting flowers, bushes, hedges and creepers. As the garden city campaign must be further encouraged I propose, for the purpose of giving a remission of income tax, to increase the maximum from $100 to $300 per annum for the expenditure on gardens. Whilst the conditions of eligibility for remission would remain the same, I am prepared to consider easing the procedure for making such claims.

(5) Remission from Estate Duty on Estates between $10,000 and $25,000

For the first $10,000, there is now no duty on the estate of a deceased person. As duty is payable on the market value of the assets, the appreciation in recent years has made even terrace houses and Housing and Development Board flats often worth more than $10,000 and, therefore, liable to estate duty. I propose to restore the position by remitting the estate duty between $10,000 and $25,000. This will ensure that poor beneficiaries inheriting small estates do not suffer by having to sell or mortgage their modest dwellings and possessions on the death of the bread-winner. Based on 1970 statistics, this remission would have benefited about 293 families out of 732 who paid estate duty. There will be no change for persons inheriting an estate worth more than $25,000 because it remains Government policy to narrow the income gap between the poor -and the wealthy.

(6) Accelerated Depreciation for industrial Anti-Pollution Devices

In promoting industrial growth, the Government has to keep in mind also the wider interest of the community. Though we want more industries and the job opportunities they bring, we do not want the pollution which is sometimes a by-product. Legislation for -control of various kinds of pollution has been enacted and the Government is now intensifying enforcement of its provisions.

Though the onus lies with the owners of industries to control pollution, the Government is prepared to assist them by allowing accelerated depreciation over three years on capital investment in approved anti-pollution devices. With the introduction of this incentive, industrialists should also accelerate their plans to install pollution control equipment.

The above measures are expected to cost the Government a total loss of revenue of approximately $3.5 million, but would bring compensatory benefits to Singapore.

Mr Speaker, Sir, may I, in concluding this "painless budget" Statement, pay a tribute to those who made it possible the workers of all ranks and occupations who so spiritedly and undauntedly met the challenges of the years since independence and by their constancy and adaptability to new circumstances, changed the difficulties and uncertainties caused by the loss of neighbouring markets upon separation from Malaysia and the loss of employment and foreign exchange upon the British military rundown into economic opportunities, opportunities which have now produced our present healthy financial situation. I am sure that in taking some of the fruits of our economic success for present consumption, they will all want to -do so with an eye for future consumption and with an appreciation of the need of investment for long-term returns.

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, 1972 to 31st March, 1973." In accordance with paragraph (1) of Standing Order No. 84, the debate now stands adjourned.

Mr Hon, debate to be resumed on what day?

Mr Hon Sui Sen: On 16th March, 1972.

Mr Speaker: So be it.