ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [28th February, 1977].

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1977 to 31st March, 1978" - [Minister for Finance].

Question again proposed.

3.31 p.m.

Dr Augustine H. H. Tan (Whampoa): Mr Speaker, Sir, I rise to support the Motion standing in the name of the Minister for Finance.

I found myself much in agreement with what the hon. Minister said in his Budget Statement. Our economy in 1976 was in much better shape than it was in the earlier year. In part, of course, this was due to the economic recovery and dampening of inflation in the leading industrial countries. But we can take due credit for the large number of sensible domestic measures and policies which enabled our economy to recover rapidly. I can find little fault with the basic policies in respect of manpower, science and technology, infrastructure, taxation and promotion.

Allow me. however, to offer a few comments which I hope will contribute to improvement.

The Minister's Economic Survey drew attention to the recovery of the manufacturing sector by 10% and noted the rise by 3% in productivity in that sector. Lest we rush to congratulate ourselves and our workers for the improvement in productivity, we should not forget that such improvements usually occur as an economy pulls out of recession. We shall still need to bend every effort to make improvements in productivity continually. Furthermore, the Economic Survey also noted that much of the overall increase in manufacturing output was accounted for by an upsurge in petroleum refining activities. Hon. Members may recall that the petroleum refining sector had suffered much in 1975 as a result of the end of the Vietnam War.

Col. 571 of the Economic Survey reported that private capital expenditure in 1976 grew by 6% to $2,359 million. The increase, however, was due to the acquisitiveness of Neptune Orient Lines, whose Managing Director has assumed the role of Member for Marine Parade. This increase masked a decline of 8% in capital expenditure on buildings and works and a 10% decline for machinery and equipment. I draw attention to this, Sir, because the volume of investment particularly in plant and equipment will affect the productive capacity of our economy in the future. This failure of investment to respond is, of course, not unique to us. As I pointed out during the debate last year and earlier this year. economic recovery in the advanced countries is being threatened by the failure of new investments being undertaken in sufficient volume. I hope, therefore, that we can make much more headway with the schemes to stimulate private industrial development such as the Capital Assistance Scheme and the Small Industries Finance Scheme. Both of these add up to a paltry $17.73 million so far!

The Hon. Minister may also want to pay some attention to the decline of private sector construction of 12% in 1976. I hope he is monitoring the situation so that we can avoid cycles of scarcity and excess, particularly of office buildings, which will affect business rentals, and hence, the costs of doing business in Singapore.

The honourable Member for Punggol may be concerned to know from col. 568 of the Economic Survey that the fishing industry declined by 5% in 1976.

Mr Ng Kah Ting: That is not too bad. Not to worry.

Dr Augustine Tan: Perhaps he is comforted by the 8% increase in pig production, the waste notwithstanding.

Sir, the Hon. Minister gave a number of tax concessions. In particular, I welcome the further relief in respect of estate duty. However, I hope that raising the exemption limit from $50,000 to $100,000 will not lead to a corresponding escalation of assessed valuation.

The Hon. Minister mentioned a budget deficit of $1,505 million, a 32% rise compared to 1976. According to the Economic Survey, in past years, the Central Provident Fund provided 70% of the loans. The amount of CPF contributions in 1977 should be close to $1,000 million. At the same time funds at the disposal of the Post Office Savings Bank rose by $408 million in 1976 to a total of $957 million. And we have $8.2 billion in foreign reserves as against foreign debt of only $660 million. Clearly, there is no lack of availability of funds. However, I am a little concerned about the distribution of public and private investment expenditure in Singapore. In 1973, the private share of total investment was 82.7% while in 1976 the corresponding share was only 75%. I hope that either the Ministry of Finance or the Monetary Authority of Singapore is studying the flow of funds and the utilisation of funds in Singapore. While I welcome the Post Office Savings Bank's efforts at encouraging saving, part of its funds represent a redirection from private banks. To the extent that this is so, the private sector's access to that savings for investment purposes is restricted.

Members may also note that there is no reference to exchange rate policy in the Economic Survey or the Budget Statement. While I am sure that the Monetary Authority of Singapore is in competent hands, I should like to see some reference in future. Exchange rate policy has a bearing on monetary, fiscal and wage policies and vice versa. For example, in col. 635 of the Economic Survey, it is noted that money supply, defined as MI, grew at 18%, due mainly to larger inflow of foreign funds. This, however, could be due to a repressed exchange rate designed to preserve the competitiveness of our exports. If this is so, the increase in foreign reserves is no mystery.

I should also like to see quarterly figures presented in the Economic Survey so that we can better analyse the trends in our economy. Moreover, end-of-year figures, particularly in such items like money supply can be quite misleading.

Looking at our prospects in 1977, although I am very concerned about the undercurrents such as insufficient investment in the industrial countries, the year itself should be fair for us.

Sir, I am in full support of the basic economic policies laid down by the Minister for Finance.

3.38 p.m.

Mr Chin Harn Tong (Aljunied): Mr Speaker, Sir, in a period when the world economy has barely recovered from the oil hike of a few years ago, and the effects of the latest OPEC increase in oil price yet to be felt, it is most welcome to have a moderate budget for the coming fiscal year. I would call it a painless budget, for it provided no shocks. The emphasis, as in the past few years, has been on investment projects and generally to create a more conducive economic climate for foreign investments which will in turn create more job opportunities. The increase in taxes on alcohol and tobacco will not, of course, be welcomed by those who habitually drink and smoke, nor by those in the tobacco and alcohol industries, nor by those in allied trades because of possible falling sales. But, Mr Speaker, Sir, who can say that alcohol and tobacco are basic commodities essential for life? In fact, healthier living is to do without them.

The other aspect of the budget estimates which I welcome is the raising of the maximum amount of estate duty for exemption purposes from $50,000 to $100,000. As we all know, every year sees an increasing number of Singaporeans becoming owner-occupiers of houses or flats. In many cases, this has only been made possible through the Government's public housing schemes enabling CPF contributions to be utilised for the purchase of HDB and HUDC flats. For these categories of Singaporeans. owning a flat would otherwise not be possible. These lower and middle income groups must realise that our Government provide them the opportunities and the incentives to have a stake in our society. This is their privilege as Singaporeans, and as of right.

In thus providing for the lower and middle income groups opportunities at home-ownership, we are surely striving for a more egalitarian society. The private property developers and entrepreneurs can no longer have a monopoly on housing. I would say the general effect of the Government housing schemes has stabilised the prices on the property market - no longer can there be the quick and vast returns on property speculation and development. Growth and development of housing now take place in a more orderly and gradual fashion; the not-so-wealthy sections of Singapore society are thus not left behind, nor are they denied the opportunities of house ownership. Thus, the budget estimates before us in raising the amount from $50,000 to $100,000 for exemption from estate duty is a very welcome one. This will ensure that those who have utilised their CPF contributions for the purchase of HDB and HUDC flats will not be penalised. What the CPF is meant for, that is, security at retirement, is now more usefully deployed.

Mr Speaker, Sir, in all budget debates at the start of every fiscal year, especially so at the commencement of a new term of office - the Fourth Parliament of the Republic - it is not irrelevant for the Government to take stock of the machinery of Government - i.e. the civil service and the statutory boards. We cannot ignore the role played by the civil servants in implementing fiscal policies of the Government, or for that matter the general functionings of a government. Because the same party continues to be in power. this must not lull the civil service into an attitude of complacency.

In the last session of this House, some comments were made on the civil servants. The point which I now wish to make is that what the civil servants do, and how they go about doing their work, has constantly to be examined.

The civil servants, in implementing Government decisions and policies, and especially the top civil servants who also advise Government Ministers on their portfolios must, in my opinion, have as broad a perspective as possible of the matters they deal with. I have observed that the upper ranks of the civil service tend to be attached to a particular Ministry or Department for many years. Without the constant and regular rotation of the top civil servants, I get the impression that some of them are so entrenched that they have the full support of their Ministers, and therefore, they assume that whatever they do will always be backed by their Ministers. This is surely not very desirable.

There are, of course, pros and cons for the frequency of rotation of civil servants among the various Ministries and Departments. On the one hand, there are valid arguments for the need for continuity in the staffing of Ministries and Departments. This is to facilitate not only the process of decision-making by the Government and Ministers, but also internal administration, and in serving the public. I recognise that in Departments such as the Inland Revenue, Police, Customs or the Industrial Relations Division of the Ministry of Labour, either because of the nature of the work involved or the continuity of services rendered, there need not be the same degree of rotation of staff for the middle-ranking and junior civil servants.

On the other hand, there is an equally valid argument that the civil servants in the higher reaches of Government service should have as wide an experience as possible of administration in the various Ministries or Departments, so that they can have a better understanding of the people whom they are supposed to serve. Members of this House may recall that several years back when there was a difference of opinion over priorities in expenditure, this was resolved by the Minister for Finance and the Minister of Defence interchanging portfolios. It is natural for each Ministry to view the priorities of the Republic on the basis of the needs and functions of the respective Ministry. My point in quoting the example is that the outcome of the interchange of portfolios has turned out to be most satisfactory.

It is very probable that in the functioning of the various Ministries misunderstandings might arise among senior civil servants who are attached for too long to the same Ministries, and who might not be able to appreciate the dimension of any problem from an overall point of view. There is thus an advantage in regularly rotating senior civil servants among the various Ministries and Departments.

Without a constant re-appraisal of the functions of the civil service, undesirable characteristics may arise. Some top civil servants develop the mentality of pleasing only their Ministers, and, of course, everyone tries to please the Prime Minister. If they report everything is ship-shape to their Ministers. then nothing is wrong with the Ministries they are in. Should junior staff have grievances. or if their workload cannot be discharged satisfactorily, this does not matter, since the Minister concerned does not know. This has the adverse effect of junior civil servants doing only the minimum, and doing things only to please their superiors. They no longer discharge their duties as responsibilities, rather as chores in order to keep their jobs. Staff morale may be low; efficiency may be low. When this bureaucratic attitude builds up, the public is adversely affected. Matters are not attended to promptly. For example, the problem of getting an immediate and satisfactory response from the civil servants. I am sure some of the hon. Members in this House have experienced, as I have. the frustrations in getting civil servants to act on the complaints we have made on behalf of our constituents.

When complaints are sent directly to the press, they seem to be attended to much quicker by the civil servants than those complaints they receive from Backbenchers. This would seem to me that civil servants are afraid of the unfavourable publicity which might draw the attention of their superiors, and. indeed the Ministers, to their shortcomings. Therefore, they have every reason and inducement to act promptly on letters of complaint in the local press. Mr Speaker, Sir, may I ask: is this right, or is this desirable? While I agree that the local press should serve as a forum for views and complaints, and that the Ministries and Government Departments concerned are seen to do their jobs, is this all for show? lam not suggesting that all Ministries and Government Departments are chronically inefficient, but there appears to be this developing trend. I contend, therefore, in order to keep the civil service on its toes, particularly the rank and file, there should be regular rotation of senior civil servants. New brooms, Mr Speaker, Sir, can sweep cleaner.

A second characteristic which can develop, Mr Speaker, Sir. if the top echelons of the civil service are not regularly rotated is the possibility of empire building. By this I mean a tendency to develop a power base on the part of the top civil servants, achieved I suppose by promoting only people who see eye-to-eye with their superiors. I am not saying that this is a common practice, but the tendency is surely there. If there is more frequent and more regular rotation of top civil servants, they will not be able to grow powerful roots.

A third feature of civil servants which I find objectionable is the secrecy which sometimes surrounds their work, and a habit of name-dropping. As an excuse for not disclosing the true state of the matter, which might be embarrassing to the civil servants, as possibly the matter concerned is in a sorry state for lack of attention, they dispose of any queries by saying the matter is being studied by the Minister who does not want publicity. Matters which should be attended to, therefore, get swept under a carpet of secrecy. No one need know that the civil service is getting more bureaucratic and less efficient. The top civil servants, after remaining in their positions for long periods of time. would often make reference to a certain Minister, or even the Prime Minister, in order to deter further queries. Likewise, some are in the habit of quoting the Prime Minister, e.g. name-drop that so-and-so is from the Prime Minister's Office, and he gets attended to very promptly. Others, even the Members of Parliament are met with a sluggish response, if at all there is going to be a response.

I hope. therefore, Mr Speaker, Sir, that in a budget debate the effect of our fiscal measures must be seen against the interests of the people, and here I have stressed how the civil service fits in. Any budget before the House must be aimed at establishing a more just and a more humane society. However, the attitude must never arise that there is a "them and us" - those who are governed. and those who govern. Because we in Parliament are collectively the servants of the people - those in the civil service are not there to serve us, but the people. In this connection, I have asked for a re-appraisal of the civil service - perhaps a kind of "shake-up" is in order.

3.55p.m.

Mr Hwang Soo Jin (Jalan Kayu): Mr Speaker, Sir, to the average taxpayer in the wage earning, class, the budget is a disappointment. As the economic situation recovered, albeit slowly in 1976, he had perhaps wistfully hoped that there would be some form of tax relief in 1977. In the event he is disappointed. From his point of view, the budget is not really a painless one. He is not sure whether he should be thankful or annoyed with the Hon. Minister for showing such persistent concern for his health by raising the taxes on tobacco and liquors second year running; even the concession in estate duty on owner-occupied property appears quite meaningless to him for the time being, as he has no wish of taking advantage of it as yet. It would have been more meaningful if he were allowed the use of his CPF balance which has by now totalled thousands of dollars attracting only a meagre rate of interest, to repay part of the mortgage which he has on his private accommodation.

As our average taxpayer ponders on the implications of the Hon. Minister's Budget Statement, I believe he feels a little sore and perhaps confused as to what it all means -all these talk about "from each his best; to each his worth". It seems to him that under the existing tax structure if a person is unfortunate enough to be a wage-earner who, for the purpose of the Inland Revenue Department, may be defined as a person having no chance of being able to either legally avoid or illegally evade the full incidence of tax, the better he is in his job the more heavily he is taxed as he rises in his position.

Sir, the plights of our tax-paying wage-earners have been raised time and again in this House but the Hon. Minister for Finance has time and again refused to consider any change in a system which we have inherited from our colonial past and, to say the least, is clearly unsuitable for a fast changing and developing society as our own. We aim to motivate our members to give of their best and to give rewards and recognition to those who excel in high performance but our tax system does not seem to reflect this philosophy! What we have is a system that encourages every man to try to be his own boss so that he could beat the system, so to speak, and enjoy all the tax deductions generally available to business firms, big or small. The end result: A nation of shopkeepers - if we do not watch out.

Only a few days ago we heard of the Hon. Minister for Health lamenting the high rate of turnover of young doctors at Government hospitals; instead of just blaming these people for their lack of sense of belonging or loyalty or whatever you may choose to call it, should we not try to look objectively at the way in which they are remunerated and the way in which they are taxed if they stay on as employed persons as against the financial prospects of their becoming their own bosses in private practice.

Sir, the personal taxation system that we have, I submit, needs to be completely overhauled fairly quickly before an increasing number of key personnel which include all categories of professional managers, administrators and technicians employed on salaries, in both our private and public sectors, work themselves to a point of financial disincentive. When that point is reached, a person either feels discontented, in which case he starts to look for greener pastures or try to set up some sort of business or practice on his own; or, he simply allows himself to slacken off in his job. There will be only four cylinders instead of eight cylinders working, Sir. Or maybe two cylinders! Whichever the course of action or attitude he finally adopts, it does us no good as, at this stage of our economic development, we need all the experienced people in the industry and in Government service continuing to give of their best. It is all very well to say we believe in "taxing the rich to subsidise the poor", or do we? I am not sure. Are we sure that those bearing the brunt of tax incidence are really "the rich" and those benefitting from whatever little State subsidies left, are really "the poor"? I am not sure, Sir, but I would humbly suggest to the Minister for Finance to give some thought to my queries. With all the brains that he has at his command in his Ministry, I am sure, Sir, he would be able to come up with an answer and hopefully we, the wage earners, can look forward to a more equitable system of taxation at the next Budget.

Sir, I would not like to turn to the Hon. Minister's comments on Trade Development in 1977. First of all, I would like to know what he proposes to do about narrowing the very substantial trade deficit of close to $2 billion with Japan. This is not the first time queries are raised in this House on this perennial imbalance of trade and it would seem to me that little has been done to get the Japanese to buy more from us. If we have not already lodged a strong representation with the Japanese government in this regard, I would urge the Government to seriously consider doing so.

On Trade Development generally, I agree with the Hon. Minister that our tactics should be to consolidate markets that we already have and at the same time explore new ones. The idea of setting up permanent exhibition centres in selected countries abroad is a good one, but before doing so I feel that we should perhaps look at our export promotion efforts ir. a rather more systematic manner and with the same degree of special care and attention that we have devoted to the task of investment promotion abroad. Up to this point of time, our export promotion efforts seem to be conducted haphazardly, rather disorganised if I may say so, and without much co-ordination. We hear of trade missions from different organisations going off every now and then, but what follow-up actions are taken and with what results -do like to know. I think we could achieve more if there is proper overall planning, organisation and co-ordination among the various trade and manufacturers' associations. Surely, Sir, the creation of an export promotion agency is the answer. With the Government providing the necessary organisation and the lead. I have no doubt that our businessmen will be only too happy to give their wholehearted support and cooperation. There is no short-cut in trade development. In order to do well in our export drive, we need to know more about overseas markets; to know more. we need to travel more and ultimately we will sell more.

Sir, as an insurance man, I find it difficult not to say a few words on the concessionary tax rate of 10% announced by the Minister on reinsurance business. To the lay public, this gesture on the part of Government may not mean very much but, speaking as a professional. I cannot help feeling excited over the likely prospect of Singapore developing rapidly into a significant international reinsurance centre over the next few years. The concessionary tax rate of 10% added to our locational advantage and good business infrastructure, such as a highly efficient telecommunication system among other things, will greatly assist in the development of this type of international business. It is a little known fact that one of the larger items of Britain's invisible earnings is from insurance and reinsurance. For example, in the year 1974 the City of London derived 41% of its invisible earnings from insurance and reinsurance, whereas the rather more prestigious business of banking contributed only 20% of a total sum of 905 million pound.

The Swiss and the Germans have also over the years developed extensive interests in the reinsurance business. Given the necessary encouragement from Government and the determination on the part of the private sector to succeed, there can be little doubt that the tax incentive will go down as an important milestone in the history of the insurance industry in Singapore. The gesture on the part of the Government, I hope. is also an indication of the greater recognition of the potentials of insurance business by the Government which hitherto has paid very little attention to the development of insurance industry. This is evidenced by the fact that for some time now, the Insurance Commissioner's office has been without a full-time Commissioner; the present Commissioner being concurrently a Deputy Secretary attached to the Ministry of Finance, and insurance is but one of his many responsibiIities. Since the Minister's announcement of the tax concession I have read in the press that with effect from 1st April the Insurance Commissioner's office will come under the control of the Monetary Authority of Singapore, and I do sincerely hope that this will be a change for the better.

In the final analysis, the efficacy of the tax incentive will be determined by two things:-

(1) Willingness on the part of the industry to invest on personnel development and training. Reinsurance business by its very nature is international in scope. We need, therefore, to train up a new breed of insurance men who will be not only technically competent but also possess an international outlook.

(2) Greater appreciation of the technical and practical aspects of the insurance business by the regulatory authorities. It is accepted that legislative control on such type of business is necessary and desirable. Over-regulation will, however, on the other hand stifle the growth of the business.

Meaningful dialogue has hitherto existed between the industry and the Insurance Commissioner's office, and I feel sure that notwithstanding the organisational change there will continue to be regular opportunities for views to be exchanged between the Insurance Commissioner and the industry.

In concluding his Statement to the House, the Hon. Minister forecasts that the weather is getting fine and fair and that our Ship of State is in good shape. Sir, as I see it, given the same competent command. our Ship of State should be able to face up to any weather condition, foul or fair.

4.10 p.m.

Dr Ow Chin Hock (Leng Kee): (In Mandarin): Mr Speaker, Sir, I rise to support the Motion standing in the name of the Hon. Minister for Finance. The Minister has described the 1976 economic performance as "not unsatisfactory." With a 7% real growth in GDP, a 2% inflation rate (in terms of GDP deflator) and a 8.1% increase in domestic fixed capital formation, the performance is a fairly good one, particularly in view of the sluggish economic recovery of the advanced countries which our economy is heavily dependent on, in the second half of the year. Regarding our growth prospect for 1977, the Minister is more cautious, taking note that the OECD countries are expected to grow at a slower rate than in 1976.

In the midst of economic uncertainties, the painless budget as proposed by the Minister is a sensible one. Only minor tax increases on liquor and tobacco products are proposed; at the same time, the increase in the Government recurrent expenditure is kept to a minimum. thus allowing more revenue resources to be transferred for development purposes. Hopefully. between now and the next Budget statement, the Minister will not give us any surprises and shocks. The recovery of our economy is still too new and fragile to absorb any shock of major tax increases. I note that the Minister, in his Addendum to the Presidential Address, has reserved the option of changing taxes as "one way of helping to encourage or discourage one kind of activity over another." This is fair enough. as using tax changes as an instrument for reallocating resources among economic activities is an integral part of fiscal policy. However, it is hoped that the important suggestions made by the Fiscal Policy Implementation Committee are to be debated in this House before they are implemented. This will be in accordance with the spirit of the President's statement that "No major policy or legislation should be passed without the closest scrutiny, and passed only after the most thorough debate."

Sir, in the Budget statement, the Minister has also stressed the importance of diversification and flexibility in our development strategies. and reiterated the five-point Economic Strategy Programme. Diversification means finding alternative markets, engaging in different economic activities, and purchasing from different sources of supplies simultaneously. With diversification, our economy is less vulnerable to a sudden slack of a given activity or in a given market. In general. we have been successful in diversifying our economic activities. On the other hand. our economy is still heavily dependent on the USA, Japan and the EEC countries. Economic realities dictate that for our future economic growth, we have to continue to depend on these advanced countries for markets for our exports, sources of capital inflow, and supplies of machinery and equipment and technology.

Geo-political considerations, particularly after the Communist victory in Indo-China. have brought the ASEAN countries closer together than before. This is evident from the five ASEAN industrial projects, our bilateral tariff accords with the Philippines and Thailand, and the recent Agreement on ASEAN Preferential Trading Arrangements. These are welcome steps towards greater regional economic cooperation. Let us, however, also be realistic. Given the present disparities in the level of development. economic structure, trade pattern and pace and strategy of industrialization, intra-ASEAN trade would be comparatively less important than ASEAN trade with the USA, Japan and the EEC countries. and the scope for industrial cooperation among the ASEAN countries would remain limited for a long time to come. At present, the better strategy .for the ASEAN countries would be to form a united front in dealing with these three advanced economic blocs in matters relating to tariff and non-tariff barriers. In this context, it is of particular importance for the ASEAN countries to pressurise Japan which has been enjoying huge surpluses in trade with ASEAN.

Sir, flexible economic policies mean that we should do away with any rigid form of economic planning. In fact, the Government has not published any five-year economic plan since independence. Instead, ad hoc policies have been implemented to soften the impact of economic crisis originating from external sources, and to seize new economic opportunities which have appeared on the horizon. Given the need for flexibility and the emphasis on efficiency, it is not surprising that statutory boards have been used to implement or even to spearhead various economic and social development programmes. The attractiveness of this form of organisation is that it enjoys greater flexibility and is given more initiative to carry out its specific functions without the loss of ultimate responsibility to the appropriate Cabinet Minister. However, as board members and top management staff have been appointed by the Minister concerned, the activities of these boards are one step removed from direct accountability to the Parliament.

Another problem area pertains to the appointment of directors. Top civil servants are normally appointed to board membership and some of them often take on several directorships simultaneously. On the positive side, interlocking directorship helps to keep these boards in line with major Government policies; on the negative, it can be a source of strain and pressure to the civil service. With their time and energy divided between several jobs, these civil servants cannot devote their best efforts and talents to each job and at the same time thoroughly understand the problems at hand. Also, because of their positions, the opinions of these top civil servants normally carry susbtantial weight in the boards. A few over zealous and powerful civil servants may therefore reduce managerial initiative.

Without a national plan which maps out the relationship between various statutory boards and their relationship with the governmental departments, coordination between these organizations seem to be lacking, thus giving rise to duplication of effort in some cases and unnecessary delay in others.

As the role of statutory boards in our national development is likely to become n-ore important. the abovementioned problems and some other problems I have not yet mentioned have to be rectified so that their usefulness and efficiency would not be affected.

Mr Speaker, Sir, let me now turn to the five-point Economic Strategy Programme. The programme has been expounded by the Minister for Finance. The programme is realistic, as it reflects the nature of the Singapore economy as well as her role as an urban centre. The programme would also help us to attain the long-term objective of transforming our economy into an industrial centre and a base for regional and international services. However, I would like to make a few comments. First, on the manpower development programme. the Hon. Minister has only made reference to graduates of technical institutions, I wonder whether the output of university graduates has been included in the manpower development programme. Recently, a local newspaper has flashed the headline about the employment prospects for some university graduates. Sir, it would be a waste of human resources if we continue to produce unemployed graduates. I wonder whether the Ministries of Finance and Education have arrived at some coordinated policy on the intake of university students into various faculties.

Secondly, although training and education would increase the working capacity of an employee, whether he will give his best depends on his attitudes towards work. The Minister has mentioned that "to instill correct work attitudes in our workers, employers must provide a proper working environment." Sir, I think this is grossly inadequate. The much more important motivational forces are rewards. Rewards could be classified into two types: intrinsic rewards such as a sense of accomplishment, pride in one's products and job satisfaction and extrinsic rewards, such as wage increases, bonuses. promotions etc. Sir, I submit that in a market economy and materialistic society like Singapore, intrinsic rewards have become impotent as a motivational force, particularly in areas where the production process is characterized by capital-intensity, a fine degree of specialisation, and mass production. Thus, the most pragmatic and effective approach to motivate employees (not just workers), to give of their best and to raise productivity is to assure them that they can derive monetary gains from such efforts. Employers must draw up appropriate incentive schemes, not just provide better working environment if workers are to be motivated.

In relation to this matter, the Minister has correctly pointed out that while workers must put in their best, employers have an equal responsibility to improve their management of personnel or of plant and equipment to increase productivity. May I add that it is also the responsibility of' employers to train workers and to upgrade their skills. This is particularly true in the case where the employers are the multi-national corporations. Our Government has given various concessions and incentives to attract these corporations; it is only fair that they should, in return, train our workers, transfer their technology and management techniques, thus helping us to increase our economic productive capacity.

4.20 p.m.

Mr Ang Nam Piau (Thomson): Mr Speaker, Sir, the Minister for Finance has presented a very moderate and sound budget for the new financial year on the 28th of last month. It is a well balanced budget. The people of Singapore are happy to hear that there are four tax concessions and no increase in revenue through increased taxation on necessities. Only the duties on liquor, cigarettes and tobacco are increased with immediate effect. Such taxes do not concern the people's daily life. As cigarettes, tobacco and liquor are considered as luxury items and harmful to health, I am sure Singaporeans are happy to accept the right decision of the Government in imposing more taxes on these three commodities.

Mr Speaker, Sir, according to the new Budget announced by the Minister for Finance, total expenditure for the new financial year will be $5,459 million as against the main revenue estimate of $3,362 million. After almost self-cancelling tax increases and tax concessions, the projected budgetary deficit is about 8% up, at $1,505 million. According to my own analysis, Mr Speaker, Sir, I think this deficit in our Budget does not mean that our economy is in trouble. As I can see it, the estimated revenue of $3,362 million is more than enough to meet the recurrent expenditure, and secondly the deficit has arisen mainly from the appropriation of $2,708 million as development expenditure to stimulate the economy and accelerate economic recovery.

In addition, Mr Speaker, Sir, to meet the deficit, the Minister for Finance has proposed some drawing down from the Development Fund of Surpluses that have been accumulated over the years or borrowing by the Government. In view of the Republic's high credit standing in international markets, there should not be any problem with the raising of loans.

Mr Speaker, Sir, the Budget is ably presented by the Minister for Finance. Therefore, it is very difficult for a non-economist like me to make comment on the Budget. I have read the Budget Statement many times over the last few days. I really find it very difficult to criticise the Budget Statement except to bring out a few points for the attention of our Government.

Mr Speaker, Sir, the Minister for Finance has mentioned that our manpower development programmes must now emphasise training in more and more specialised skills. I think our Government has taken a right step in this direction. As we know, manpower is the most valuable resource we have. Therefore, the best possible training and education must be provided to our young population if they are to be sufficiently equipped to serve the needs of our nation and industry. Mr Speaker, Sir, as we all know, today, Singapore still has to rely a great deal on imported foreign expertise in both commerce and industry. With our present rate of manpower development programmes, I hope our Government will inform the House when Singapore will be able to be self-sufficient in her needs for professional, management, technological and other specialised skills.

Mr Speaker, Sir. in the rapid process of urbanisation and industrialisation in Singapore, our life styles have changed, but I wonder whether we have changed for the better or for worse. Sir, there is one thing I am quite sure. Progress will bring along with it more wealth. In some Western countries today, over-affluence has caused youths to lose their diligence and willingness to work. They fall out of society and take to escapist life styles, seeking refuge in drug-taking or form their own sub-cultures. Fortunately, Sir, Singapore is not entirely immune to such social diseases, but with greater preventives, we can save our children from degenerating cults alien to our country, like hippism and drug-addiction. The responsibility of protecting our future generation falls on us, both Government and parents. It will be a demanding task which we have to carry it out well. How shall we educate our children in the future on their responsibility to themselves and to society? This problem must be faced now and it is one which calls for long term planning. Our education must be bilingual, including moral and civic training. This is a primary need if we are to build a strong and rich nation, with both heart and soul.

Mr Speaker, Sir, our future is full of uncertainties and difficulties. Our future is a challenging one. In the next few years we have to face the challenge to govern and the challenge to hold the nation together. We must not fail. Otherwise whatever we have achieved over the past years under the able leadership of the People's Action Party Government will be lost through chaos created by ourselves. Mr Speaker, Sir, in any chaotic situation, life cannot remain comfortable, no matter how advanced we may be or how much we possess materially. Normal life will be uprooted; for instance, general strikes and riots in the Lim Yew Hock Government. We must learn from such painful experiences if we are not to be pushed to the threshold of national disaster.

Mr Speaker, Sir, before I conclude my speech, may I seek an assurance from the Hon. Minister for Finance that our Financial Policy is not only to continue to pursue our long term economic strategy programme for our economy's transformation to an industrial centre and a base for regional and international services but to see that our per capita income distribution is always towards equity. As we know. Sir, for the past few years our per capita income distribution is not ideal as the trend is not always towards equity. There is still a wide gap between the rich and poor. Therefore, Mr Speaker, Sir, I hope the Hon. Minister for Finance will look into this serious and important matter urgently.

In conclusion, Sir, all in all, Singapore is in a very sound financial position. This is a budget that is welcomed by all the people of Singapore and I hereby wish to join my other colleagues in support of the Financial Policy.

Mr Speaker: Order. I propose to take the Suspension now. I suspend this Sitting and will take the Chair again at 5.00 o'clock.

Sitting accordingly suspended at 4.31 p.m. until 5.00 p.m. Sitting resumed at 5.00 p.m.