ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Question again proposed.

Encik Sidek bin Saniff (Kolam Ayer): Mr Speaker, Sir, the Modern Civilization, whether it is the Western capitalism or the Communist Socialism is characteristically materialistic. There is a belief that this attitude or character has been deeply influenced by at least four great modern philosophers:

1. Sigmund Freud, who dealt on the significance of overwhelming urge of sex in human nature.

2. Karl Marx, who said that the belly is the most important and significant human factor, coaxing the realisation of "the realm of liberty".

3. Machiavelli, who preached politics and the use of deceit in politics and diplomacy or political intrigue, and last but not least.

4. Darwin, with his theory, who traced human origin to the animal.

And what happened next as a conclusion is everybody's guess: that man is full of sex (Freud), tormented by a hungry stomach (Marx), deceitful in politics (Machiavelli) and, on top of it, he was in fact the direct progeny of animals and became man only by accident as a next step from the monkey (Darwin). Succinctly, it is only natural that we live in the present chaotic conditions of the world. A sick world. A very sick world. I believe that this ugly atmosphere could easily be changed if we have faith. Either faith in religion, philosophy, leaders of your country and, above all, your fellow human beings. With faith, we will have a fuller meaningful sex life, legally of course through marriage, as an answer to Freud; we could use the most important instrument - the brain - so that our stomachs are not empty even for a country without natural resources or reproducible commodities, as an answer to Karl Marx; we need politics and politicians who are serious and fully committed to the profession the kind of sense of commitment that will produce a non-corrupt government, as corruption is the cancer of development and the sign of inefficiency as the answer to Machiavelli; and last but not least, whether Darwin, or recently Richard Leakey and the other anthropologists, want to claim kinship with animals such as monkey, ape or gorilla, that is your pleasure and liberty to think so.

Civilization has given man a high level of progress in every field: economy, education, politics, individual freedom and social justice. Unfortunately, it is always threatened by misfortune and dangers created by man himself. There is an element of truth when it said:

Beneath the dingy uniformity of international fashion in dress, man remains what he always has been: a splendid fighting animal, a self sacrificing hero and a blood thirsty savage.

So history has given us both these good and bad elements. For example, preparation for any conflict or war took top priority as it did among Shepherds of Inner Asia and the agriculturists who took the beating by herdsmen warriors. On the other hand, we can also learn from the example of the Scandinavian people who were once warriors and brigands but who are now highly respected and honoured because of their respect for civility.

We must hope and vigorously try so that the good qualities will continuously develop between man and man all over the world. We have seen enough and we do not want to see the repeat of world wars or any other wars for that matter, such as the guerilla wars; puppet states and war by proxy in small countries by major powers who mask their participation in order to avoid direct confrontation among themselves. We also note with relief the fact that 1960's saw the beginning of international efforts to commonly share the outer space and prevent it from becoming a battle ground between nations for the simple reason that if we fail to avert it that could be the beginning of an end of civilization - so much more potently devastating than what had happened in the last world war. Or as early as last month during the Commonwealth Heads of Government Regional Meeting in Sydney, Australia, where 12 Heads of Government met to solve some urgent economic and political problems of the region, participants were given a warm welcome by Prime Minister Fraser and the Australian people, only to be marred by the act of some madmen which turned the warm welcome into an explosive welcome.

Mr Speaker, Sir, society owes its existence to three important distinct elements: (1) An aggregate of individuals; (2) An organized system; and (3) An esprit de corps or the feeling of oneness.

With these elements hopefully we could produce thinkers, planners and deliverers. It would be better still if these qualities are possessed by every one of them or at least some individuals. We need people with "intellectual courage" - courage enough to say "yes" when things are right and a simple "no" when they are wrong. To say "no" all the time is unfair to our intelligence and to say "yes" all the time even when things are wrong is an insult to our intelligence. This is what makes a country tick. And any education system in any country will project a society that could "think". Since thinking is a complex activity it is of prime importance that it must be nurtured from young and equally important that we learn and share our experiences, for example, through organisation within the country and among countries of the region or of the world. This is where we can pronounce views and solve important problems, such as international trade, intraregional trade, terrorism, drugs or energy crisis, and so on and so forth. And if the esprit de corps can flourish and we always try our best not to be selfish, I am confident our country, the region or even the world for that matter will be a better place to live in. And this needs education.

Education, being one of the most important instruments in the national endeavours for the progress of a country still dominates the scene. Hopefully the emphasis on the second language and the introduction of German, Japanese and French languages as the third language will further encourage education which is sought for by our highly achievement-oriented society. Radical changes will take place in a country because of two vitally important factors, its political system within which is entrenched the value of its education policy. We have to keep pace with the progress of the industrial world. To progress means to industrialise. Otherwise we will miss the boat. Because when we discuss about education we are, in fact, dealing with the future. Yet the future is one that can never be rightly ascertained. However, the discussion, and later on the decision, is always useful simply because the future has one vital advantage. It gives us the benefit of past experiences and exposes us with the realities of today. From here, we embark on the future. This future is our ultimate and constant challenge. It must be explored with dedication and aspiration so that our expectations could always be met.

Changes are quite a normal happening everywhere. Anything static would be most unnatural. In other words, to change is normal and not to change is abnormal. And as an agent of social change, whether it is exogenous, endogenous, episodic or patterned, education should be able to evolve for us a nation or society that is rugged, poised and bold in facing, the challenges ahead, while at the same time appreciative of our own aesthetic value.

Hopefully this aspiration is internalised and inspiring, and will inculcate in the minds of the people of Singapore the importance of living together peacefully and share their progress with others.

Let us hope that the big industrial powers which had planned for a concerted effort to relieve the world economic doldrums - irrespective of whether or not their specialists are no longer talking of the "locomotive theory" headed by Japan and West Germany and now prefer the "convoy approach" - will always remember to share their progress with others too, and to remember that protectionism is not a long-term advantage. It is mere selfishness.

Since I am touching on selfishness, let me illustrate this with the unique primitive example of the African Folk thought as stated by Emory S. Borgadus in his book, the Development of Social Thought. He says, "The high crime and misdemeanour of the town is to dine alone". It may be primitive but still relevant. In other words, the criminal, of all persons, is not the murder, as it is, but the "mask mass-murder" of "Mr Eat Along; Mr Selfish and Mr Protectionism".

Let us take this as a reminder to fulfil our duty as the decision makers, and hopefully it will be a stark reminder to Mondale or George Meany or others who share this short-term view of protectionism the danger they have created. If they do, I think Devan Nair and others can have a second thought of declaring 1978 as "Anti-Protectionism Year". And the galloping horse will surely surpass last year's 7.8% GNP.

Last but not least, I have the same views as that of several other Members on the matter of telephones, TV, the cinema and cultural entertainment. I think they are now a necessity rather than a luxury for the ordinary people. The telephone, for instance, is very necessary as more and more mothers, brothers and sisters are working, some at odd hours. We want them to work hard. They do so. We want them to contribute to the nation. They do so. But in return what is our contribution to them? Certainly not more tax. 5.37 p.m.

Mr Chin Harn Tong (Aljunied): ( In Mandarin): Mr Speaker, Sir, the major countries in the OECD were able to register a GNP growth rate of only 4% last year and there had been a slow recovery from world recession. In the face of this situation, coupled with an upsurge in protectionism, it is indeed gratifying to note that we have been able to achieve a 7.8% growth last year. Not only that, our foreign exchange reserves have increased to $9 billion. This further indicates that our economic position has been sound and stable. The Budget statement by the Minister besides giving us such good news has also announced tax concessions on income tax and a reduction in the tax on PUB bills. All these concessions will benefit our people. The tax concessions to investors will encourage local businessmen to invest more and attract foreign capital. These factors will also promote our economic development. I support the Budget statement of the Minister for Finance.

Mr Speaker, Sir, we have no natural resources and yet we have been able to surmount all kinds of difficulties and achieve such remarkable results in our economy. All this can be attributed to the enlightened leadership of the Government, cooperation between management and labour and the people's hard work in these past years. However, we must not be complacent and satisfied with what we have achieved at present, because complacency is the root cause of failure. In order to achieve better results in our economic production, it is necessary to constantly review our efforts in this regard. In the past year Government and Labour have been working very hard in the paramount interest of our nation. This is a fact well known to all the people. However, the attitude of some employers needs to be brought up for criticism. Raising productivity is an essential factor for increasing our production. Towards this end the Government has established the National Productivity Board to deal with matters related thereto. In this respect, the NTUC has also engaged specialists to constantly study the ways and means of solving problems within this sphere. Whenever union representatives negotiate with the employer over collective agreement, they would ask for the setting up of a Productivity Committee to be embodied in their agreement. On the contrary, the employers appear cold and always tried to dilly dally on this point or they would send representatives without any authority to make decisions to tackle the workers' representatives. They have not seriously understood the connection between productivity and national economy. Such employers are more a hindrance than a help to our efforts in achieving higher economic development. Such an attitude is most regrettable.

Mr Speaker, Sir, the NTUC has frequently conducted educational courses for workers in order to instil proper consciousness and better understanding of the need for productivity in the minds of the workers. There were among others two-week residential courses, week-end seminars and so on. When the workers are imbued with such proper work consciousness, obviously it will enhance productivity which will also be in the interest of the employer. However, certain employers who are shortsighted have adopted a negative, indifferent and non-cooperative attitude. They have refused to allow workers to take time off to take part in these courses and seminars. They have even forbidden union officials to take part in meetings for such purposes. Such an attitude will hinder our economic development. In their attitude towards the workers, certain employers appeared to regard diligent work and raising of productivity to be the business of the workers, and none of their own business. Therefore, they appeared perfunctory and indifferent in this regard. Worse still, certain employers even make use of productivity as a pretext and means to exploit the workers. Such a behaviour is also intolerable. In fact, in raising productivity, not only should the workers acquire the relevant know-how and work diligently and efficiently, the employers should also do the same. But the employers are too preoccupied with making money and would not humble themselves to understand the problems involved. As a result, erroneous measures in management. occurred. This has given rise to mutual suspicion among the workers, leading to workers' dissatisfaction of the employers and a lowering of work morale. All these consequences can be attributed to the attitude of the employers.

Mr Speaker, Sir, fortunately there are still some enlightened employers who realise the importance of productivity which is not only beneficial to the national economy as a whole but also in keeping with their long term business interest. They have conducted various kinds of courses and training programmes in their workshops for the workers. I hope that errant employers who had been negligent in the past would learn from these enlightened employers.

Sir, I would like to emphasise once more that only with honest cooperation among the Government, Labour and Management and their diligent effort can our economy be able to achieve yet greater and more glamorous results. 5.46 p.m.

Dr Lau Teik Soon: Mr Speaker, Sir, I rise in support of the motion moved by the Minister for Finance on the financial policy for FY 78.

Sir, despite the unfavourable international trends in 1977, Singapore achieved a growth rate of 7.8% which is higher than the 7% achieved in 1976. This growth was obtained together with an increase in external trade by 18%, expansion in international banking, relative price stability and a fall in unemployment to 3.9%. In this year's budget, to stimulate further growth in our industrial and trade development, the Minister has provided considerable incentives, like the Capital Assistance Scheme and the investment credit scheme, to the export-oriented manufacturers, the bankers and the foreign investors. Further, by the revision of the personal income tax structure, the Minister has provided rewards for higher skills, productivity and talents. Thus, it is hoped that with the various proposals, Singapore can advance and maintain its present growth rate.

Sir, Singapore is a global city state and we need to be reminded of our inter-dependency with other countries, especially those on whom we look to for markets, capital investment and high technology. In this respect, we should be aware of the foreign and international developments which have implications for our economic growth.

Certain political and economic crises persist in the international environment and our growth rate will be affected by whether they turn for the worse or the better. These international events involve the major powers, including the OECD countries. These seemingly insoluble issues include the Palestinian problem, the Jewish settlements in occupied territories, the Ethiopian-Somali War over the Ogaden desert and the future of South Africa. These conflicts all occur in regions where the major powers have vital interests and hence, if they were to escalate, could lead to disaster for the rest of the world. It is hoped that with the statesmanship and leadership of the leaders in those states affected and the constraint of the major powers, these issues could be resolved. This in turn will promote a better international climate for trade and industrial development for both the developing and industrial states.

In the OECD countries, especially in Western Europe, there are political and economic developments which may have implications for our relations with these states. The international recession, domestic unemployment especially among the youths, and the weakening American dollar may lead to radical changes in the political and economic systems of these countries. The intensity of industrial unrest, continuing inflation, the trend toward protectionism and the rising tide of Euro-communism may have unfortunate consequences for developing countries such as Singapore. Thus for example, the OECD countries may revise their system of Generalised System of Preferences in favour of restricting imports of manufactured products from developing countries. Thus, we have to be constantly alert to these events so that adjustments can be made to offset any reverses.

Our prospects for growth are boosted by the encouraging developments within the region, in particular the economic cooperation among the Asean countries and the normalisation of relations between the Asean and Indo-China states. The gradual implementation of the Agreement of Tariff Arrangements from August, 1977 among the Asean countries and the continuing interest in the promotion of the industrial projects, augur well for intra-regional trade and the industrial development of the Asean countries. I hope that the Asean governments will take advantage of the Japanese offer of financial assistance of US $1 billion for the industrial projects. Further, I call upon the Asean governments to provide incentives for the private sector to participate in these projects. The normalisation of relations between Asean and the Indo-China states will create peace and stability in the region, which is essential for the economic growth of every Southeast Asian state. Singapore's role will be crucial and pivotal in the promotion of economic cooperation and I hope that every effort will be made to support Asean economic cooperation and economic ties with the Indo-China states.

The Asean countries should achieve progress in their economic relations with the OECD countries. Thus, every effort must be made to present a cohesive front in all negotiations between Asean governments and Japan, the United States, the EEC, Australia and New Zealand. As far as the Asean-US discussions are concerned, the Asean governments should urge the American public and the American Congress to reject President Carter's proposal to abolish the tax deferral for US companies abroad. It should be impressed upon the US government that such a move will be a backward step in Asean-US relations, and that it will retard the economic growth of the Asean countries which is vital for the peace and stability of the region.

Before I conclude, Mr Speaker, Sir, may I just comment on the increase in entertainment tax, tax increase on telephone bills and the removal of the garden tax remission. In the Budget debate last year, I called for increased taxes on certain entertainment establishments, especially the nightclubs. On this point, I would like to oppose the Minister's proposal to increase cinema duty. This move is grossly unfair to the majority of the people who are cinemagoers. On the other hand, I support the Minister's proposal to increase the tax on such establishments as nightclubs. In fact, he should consider a higher tax on such places, lest the present proposal may not be sufficient to deter our people, especially the youths, from patronising such places.

Sir, presently, one out of six Singaporeans has a telephone and it has become not a luxury but a necessity to the majority of the people. Households having telephones are already paying Government tax and there is no reason to increase their burden by the additional tax. Then, on the garden tax, I cannot agree with the Minister's argument that since our objective of clean and green city state has been achieved, there is no longer any need for this remission for the maintenance of private gardens. Mr Speaker, Sir, just as there are disincentives for undesirable social practices like having big families, taking drugs, owning more than one car, there should be incentives to promote desirable ones. Maintaining a private garden is a desirable habit and should be encouraged. Moreover, it is not just a matter of maintaining a private garden; it is also the inculcation of values such as the appreciation of our natural environment and our clean and green areas. So I appeal to the Minister to withdraw his proposals to increase tax on telephone bills and to discontinue the tax remission for the maintenance of private gardens. 5.57 p.m.

Mr S. Dhanabalan (Kallang): Mr Speaker, Sir, given the economic conditions that prevailed internationally, Singapore did well in 1977. In fact, many Finance Ministers would give their right arm to be in the happy position of our Finance Minister, to be able to report year after year steady overall progress of the economy and healthy accumulation of government surpluses. Members are aware that Government finances are in even better shape than is apparent in the annual budgets presented to Parliament. There is a vast difference between the actual position and the budget estimates, even the revised estimates, presented to us every year.

Sir, I have prepared two Tables (Cols. 723 - 724) and with your permission I would like to distribute them to Members so that they can follow the figures that I will be quoting. [Copies of Tables distributed to Members.] As it can be seen in Table I, for the Fiscal Years 1972-1976, a period of five years, actual revenues exceeded budget estimates by an average of about $525 million per year with a low variance of plus $370 million in Fiscal Year 1972 and a high variance of plus $752 million in Fiscal Year 1975. For the same period, total Government expenditure both under the Main and Development Heads was less than estimate by an average of $860 million per year with a low variance of minus $375 million in Fiscal Year 1973 to a high variance of minus $1,698 million in 1976. There is no reason to believe, Sir, that the variances will be different or much less in Fiscal Year 1977. The true state of Government finances can be seen more clearly in Table II. Although this shows a period of six years, the picture has been the same since 1968. Every year, current revenues have been more than sufficient to finance all current and direct Government development expenditures and loans to statutory boards and companies without the need to borrow or drawdown from the Development Fund. The greater part of the amount shown as Development Expenditure in the estimates is loans to statutory boards and companies which, apart from some minor exceptions are used for investment in viable projects. The statutory boards and companies are expected to, and in fact do, pay interest and principal to the Government. These loans by the Government can therefore be considered to be in the nature of investment of Government surpluses. I am aware that to treat such loans as investments does not fit in with the orthodox definition of development expenditure but it is a treatment that can be justified both on accounting and economic principles. Column (5) of Table II shows the surplus from current revenue after meeting current expenditure and direct Government development expenditure. This surplus is more than sufficient to meet the net loan requirements of statutory boards and companies to finance projects undertaken by them and column (7) of Table II shows the surplus after meeting all requirements i.e. after current expenditure, direct Government development expenditure and loans to statutory boards and companies. GOVERNMENT FINANCE: ESTIMATED AND ACTUAL, GOVERNMENT FINANCE: USE OF GOVERNMENT REVENUE (ACTUAL)

In fact, if the trend of the past 10 years continues, the Government will have to tax its ingenuity to find profitable local investment outlets for its surpluses. One must also remember that the surpluses of other Government institutions, such as the Monetary Authority and the Currency Board or even the income from investment and loans made from the Development Fund, which income was about $300 million for the year 1976/1977, are not included in the figures shown in the Tables. My point in drawing attention to the very healthy state of Government finances is not to suggest that we can enter an era of reckless spending or that we can indulge in some of the excesses that we see in the welfare states of the West. Our sober and hardheaded approach to Government financial management is one of the main reasons for our record in growth and stability and it is a philosophy that we should continue to adhere to. But I would like to suggest that while preserving caution and prudence, we could be a little more bold than in the past in raising the quality of some of our social services. For example, under our urban renewal programme, the approach appears to be to put all sites acquired to commercial use. Surely we can now afford to acquire land in the city area, for example in the Chinatown area, for use as parks. Take another example, the field of education. Up till now, in order to conserve resources we have had two sessions, a morning and an afternoon session, in every school. Could we not afford to plan to phase out this system over the next ten years or so by building more schools and employing more principals? If we can have all children in morning sessions, it will have a tremendous impact in raising the standard of education. To quote one advantage, children and teachers will have more conducive times for extra curricular activities and special or extra classes can be arranged in the afternoons to help slow learners or for difficult subjects. Obviously, there are problems in such an upgrading of social services but these are not insoluble given our financial strength. As shown, every year our current revenue has been more than sufficient to meet all our requirements and we have had no need to borrow whether locally or abroad to meet our requirements. This is of course not to say that the government should not raise loans both locally and abroad. There are various good reasons why government should continue to borrow which I need not go into at this juncture. But the point I would like to make is that there is an urgent need to set up a mechanism in government to plan and set new priorities to guide government expenditures. We can afford to make substantial improvements in our social services and be more bold in our investment in economic services and at the same time keep sufficient in our reserves to take care of our requirements in years when our economic performance may be poor.

Although our performance in 1977 was satisfactory, it is clear that greater efforts are needed to maintain this in the coming years. The Minister for Finance has presented a package of tax concessions to promote further growth of the manufacturing sector as well as the traditional trading sectors. Through judicious use of tax concessions, we have managed to promote the growth of our manufacturing sector. We should be able to do the same in other sectors. Our tax concessions have been effective in attracting foreign investment because of the enlightened approach of some of the countries from which we obtain our investment. Countries like Germany, Japan and the United Kingdom recognise that tax concessions given by us should not be nullified by their actions and have agreed in Double Tax Agreements that taxes foregone by us can be deemed to have been paid in Singapore when they calculate the tax liability of the investors when these investors take back their profits to their home country. Unfortunately, USA has never recognised that it should not collect taxes foregone by other countries. However, because it has a tax deferral system that only taxes incomes earned abroad when they are returned to USA as dividends, our tax concessions still have an advantage to US investors. If tax deferral is ended, it will nullify our tax concessions. While one can sympathise with the US government's attempt to remove the tax advantage it gives US investors abroad through its own tax policies, one cannot accept its attempts to collect taxes sacrificed by us who make such sacrifices in order to close the wide gap in economic development that we have with the developed countries. If tax deferral is ended, we must make every attempt to enter into some bilateral arrangement which will prevent taxes sacrificed by us ending up in US government coffers thus completely nullifying our tax concessions. One can only hope that the US government can be persuaded to adopt the more enlightened tax approach of countries like Germany and Japan.

It is also heartening to note that the Minister intends to fix the maximum marginal tax on repatriated profits at 40%. We are beginning to recognise that Singaporeans who have investments abroad should not be discouraged from bringing back their profits into Singapore. The move, however, does not go far enough. There is at present no hindrance to Singapore resident companies and individuals investing abroad. The various measures to liberalise exchange controls have really been adjustments of rules to reflect what is already possible rather than a real liberalisation. We still have scheduled and unscheduled territories in our exchange control regulations which are vestiges of the sterling area system. To scheduled territories like Hong Kong, a Singaporean can remit capital without limit. But Hong Kong itself has long ago abandoned the kind of controls associated with the sterling area concept so that funds that come into Hong Kong can quite freely be invested in any part of the world. Thus, a Singapore resident can, if he goes through certain legal steps, invest any amount in any part of the world through Hong Kong or even the United Kingdom. Having adopted a de facto system that is free of exchange controls on investment by Singaporeans abroad, our tax system has thus far been maintained to discourage them from bringing their foreign profits back to Singapore. While the move to reduce the maximum marginal rate to 40% is welcome and should at least offer no discouragement for Singapore investors in Malaysia to bring their profits back to Singapore, it still does not encourage Singaporeans to bring back profits from other places which have lower taxes than Singapore. I am not suggesting that there should be no taxes on foreign income brought into Singapore by residents but the situation should be carefully monitored and taxes reduced to a level that will not discourage the return of profits accumulated by Singaporeans abroad. 6.05 p.m.

[Mr Deputy Speaker in the Chair]

Mr Ho Kah Leong (Jurong): ( In Mandarin): Mr Deputy Speaker, Sir, the Finance Minister's budget speech as announced at the end of last month fully reflects the stability of our economy. In spite of the sluggish recovery in the economy of the world, we have been able to achieve 7.8% growth, which exceeds the growth rate of some West European countries. This is something we should be proud of. Of course, we are fortunate to have a very wise and capable Finance Minister to help us achieve this.

In his new financial policy, the Finance Minister has also made the necessary adjustments to our tax structure which will lighten, equalise and rationalise the tax burden of our people in general. There are also new incentives offered by the Finance Minister to stimulate industrial and economic activities. On the whole, over the past ten years or so as a result of our successful industrialisation programme the profits of the industries have been growing. This helps to improve the standard of living of the people over the years.

For Singapore, we have already solved the immediate economic problems of the incipient stage of our nationhood. Economic prosperity has solved the problem of livelihood of the people, and it has also brought about radical changes to our society. In the wake of economic prosperity, we are confronted with new urban social problems. As we know, Singapore is an open society, vulnerable to the influences from the external sources, particularly in the process of imbibing and importing science and technology and other things from the West. So we have also been subjected to the undesirable influences from other countries. Increased drug taking is one example. So there is the need for us to emphasise mother tongue education and together with our indigenous culture we can counter the influence of the decadent culture from the West. If we launch a cultural campaign, we will be more successful in our efforts. We must emphasise that culture plays an important role. In this respect I regret to note that in the next financial year the expenditure for cultural promotion is a very small amount of $49 million. This is a very meagre sum to develop culture. It is my hope that in subsequent financial years the Finance Minister will increase the vote for cultural promotion.

However, with the lack of funds, it does not mean that cultural activities cannot be promoted. For instance, the Government can adopt other measures to promote cultural activities. Here, I would like to make some proposals for the consideration of the Finance Minister. In the past few years art circles have had quite a thriving activity but the trouble is that there were more viewers than buyers. I do not mean to say that works of art should be sold like a commercial commodity. Artists are human beings and they have to earn a livelihood. The cost of producing a work of art is increasing, and if artists are unable to sell their works, their spirit will be dampened because they will not earn enough to pay for their art materials. On the other hand, if we can encourage the people to buy works of art created by our local artists, it will be a great help to our artists. The Ministry of Finance should therefore provide the incentive by granting tax concession for the purchase of works of art produced by local artists. In the meantime, the income derived from the sales of works of local artists should be able to enjoy income tax exemption. To prevent any malpractices we can approach the National Art Gallery to act as the middleman for the transaction and to produce proof of sale for tax relief or tax deduction. I believe that with such encouragement, many companies, collectors and ordinary people will buy more paintings or other works of an. In this way, we can stimulate the promotion of art and culture in Singapore, thereby helping to bring about the graceful society of more cultured people.

I hope the Minister for Finance will give serious consideration to my proposal. With this note, I support the financial policy of the Government. 6.12 p.m.

Mr Phey Yew Kok (Boon Teck): Mr Deputy Speaker, Sir, from the point of view of the workers in Singapore, the shift and the impact of taxation in income to consumption tax is most welcome by Labour, as the tax burden would fall upon those who are most able to pay. It will be a welcome relief to the majority of workers who have to live within their basic needs.

It has been another major concession in this Budget statement for the Finance Minister's decision to scrap the 5% tax on PUB bills of between $35 and $ 50. I am glad that this Government is not oblivious to the voice of its people through their representatives in Parliament. This is a popular move because there is an actual savings of about $2 per household per month. I am happy that the merits of the abolition of this tax will no doubt provide an added incentive for Singaporeans to save water and to conserve energy.

I am sure the workers in Singapore will give their wholehearted support to the efforts of the Government to strengthen the economy and create employment opportunities for our people. I must, however, share my reservation with the Members of this House over some of the other proposals made by the Finance Minister.

The Budget Statement has also spelt out the Government's policy on manpower development and it is in this area that I must comment on the system of training conducted at the Industrial Training Board and other training centres. It has been a common complaint by workers in manufacturing establishments that the prospect for upgrading their skills is remote because the ITB and other training centres conduct classes catering more to school leavers and employees working on normal office hours. We are aware that ITB also conducts evening courses but since the majority of industrial workers are on shift work, they are not able to take advantage of such training schemes. In line with the Government's objectives of upgrading the level of skills in our industries, it is my view that more companies should provide inplant training and that training centres, including those managed by ITB, exercise some measure of flexibility in the arrangement of the time schedules for such training courses.

There would appear to be no justifiable basis for the 100% increase in the driving licence fees. The $10 increase is intended to bring in additional revenue amounting to $7 million in this financial year, but I am of the opinion that there are better ways of raising this revenue without adding on to the financial burden of the many thousands of workers whose occupations require the possession of a driving licence,

Finally, Sir, I would like to express my reservation in respect of the increase in entertainment duty for live entertainments such as stage plays, concerts, recitals, music performances and dances. The increase in entertainment duty runs counter to Singapore's objective of promoting cultural activities. We have too often being dubbed a nation without a soul and, to prevent the Republic from becoming a cultural desert, there should not be an increase in the levy of this very form of entertainment which is not promoted for the purpose of profit-making. A distinction must be made between this form of cultural activity and the commercial entertainment provided in our nightclubs and cinemas.

6.19 p.m.

Mr Lim Chee Onn (Bukit Merah): Mr Deputy Speaker, Sir, the Hon. Minister for Finance began his Budget speech with the welcome news that Singapore did well in 1977 despite the difficult international economic situation. This simple and modest statement does not reflect the tremendous efforts that have gone into charting the proper course for our Ship of State. To be able to generate a growth of 7.8% in our economy and reduce unemployment to 3.9% in the face of falling world trade and slow recovery of the world economy takes more than just good fortune. The pragmatic policies and flexible approach which have been the hallmark of our development strategy have served us well in the past. We will do well to continue on these lines but at the same time we must bolster our shock absorbers to enable us to withstand the jolts of still higher fuel prices, increasingly protectionist policies of the industrialised countries and a slower growth in world trade.

One of the elements in our economic strategy over the next few years is to further upgrade our industries, especially in the production of capital goods. It is only right that the Government, especially the taxman, should lead the way in stimulating the corporate sector to achieve this. However, the success of our industrial, trade and services development programmes ultimately depends on much more than tax incentives alone. It requires our local entrepreneurs to develop, in addition to a razor-sharp mind, the keen perception of an opportunist and the acumen of an accomplished businessman. The question we must ask, is, how do our own entrepreneurs fare in comparison with those elsewhere, say, in Hong Kong or South Korea.

The point I am trying to make, Sir, is that such sterling qualities can only be developed and sharpened by active engagement in the competition for profits, especially in the international arena, and such battles must be fought without excessive molly coddling from the Government. Should our local entrepreneurs come to rely too much on the Government to bail them out when the going gets tough, or worse still, become unwilling to make a move unless safe profits are assured either through further tax incentives or other fiscal aids, then I am afraid that one of two things can happen in a real hard crisis. Either our economic shock absorbers will break at the first impact with a sizable economic pothole, or the Government will have to keep on pouring incentive schemes one after the other into a bottomless pit.

Mr Deputy Speaker, Sir, the fiscal policies outlined in the Minister's Budget Statement have not overlooked the need to encourage our entrepreneurs in prudent risk taking and to develop in them a true entrepreneurial ability. For this reason, I support these policies and welcome the proposed company tax package aimed at widening and deepening our industrial and financial sectors.

While incentives can be given to channel resources in the right direction and to encourage investment in the more desirable industries, the whole plan will not got off the ground unless there are skilled and trained personnel to operate and maintain the lines of production.

Sir, I am referring to the need to improve and upgrade our most precious assets, namely, our human resources. It is indeed strange that while acknowledging the immaturity of our industrial workforce, there has been little or nothing said regarding plans for its further development. In fact, I find it difficult to reconcile the desire to accelerate the deepening of our industrial sector with the fact that only 11 lines out of a 33-page Budget Statement were devoted to discussing manpower development.

Although I am slightly reassured by the fact that 15% of the estimated expenditure under the Main Estimates for FY 78 has been set aside for Education, out of which the vocational training institutes, secondary technical schools, education centres and universities will be getting their fair share, and the fact that over $15 million have been earmarked for expenditure in manpower planning under the Ministry of Finance's vote, I hope that the passing reference to manpower development in the Budget speech does not mean that the Ministry of Finance has relegated the training and re-training of our workforce to a lower priority.

With greater emphasis placed on higher skills, and the setting up of high technology industries, it is inevitable that some members of the labour force will become apprehensive about the security of their future. This applies especially to those who are relatively older, and could even affect those who are semi-skilled or skilled. This is exemplified by the recent call by our local ship radio operators for assistance in upgrading themselves to radio officers as they have found it increasingly difficult to get jobs as radio operators.

In-house training programmes to upgrade the skills of existing employees would be ideal, but unfortunately not many factories at present undertake this task. I would urge the Government to look into this matter and consider ways of helping those who are in this predicament. Since most of the statutory boards which are also large users of manpower have fairly comprehensive training programmes, perhaps some arrangements can be made for them to help employees who have found themselves out on a limb as a result of technological change in our industries.

In the same vein, Sir, I hope that in its anxiety and efforts to improve the lot of the senior civil servants so as to retain their services, the Ministry of Finance has not forgotten the people at the bottom of the civil service pyramid. The Government has reassured the public that every attempt will be made to improve the grade of services provided, be it in hospitals, airports, police stations or across counters in public offices. Much of the daily routine in such places is handled by Divisions III and IV officers, who more often than not are by-passed when plans for upgrading the conditions of employment for civil servants are formulated.

It is these same officers who come into contact with the public most frequently. Should there be genuine grievances which create discontentment among junior officers, it will be in the interest of the Department or Ministry concerned to try to resolve these problems rather than to sweep them under the carpet or to will them away. Unless these problems are given an airing and are tackled squarely, efforts to raise the standard of service provided to the public will be to no avail. Sir, I hope that this remark will not be construed by the Hon. Minister to be in support of rudeness on the part of civil servants, for on the contrary, I would be the last to condone slipshod work and poor work ethics from any sector.

While I do not wish to detract from the contributions made by senior civil servants, I wonder how often have the authorities spared a thought to improving the conditions and job prospects for junior officers. Obviously not every Division III or IV officer will have the aptitude for self-improvement through the acquisition of higher skills. But for those who have and are so inclined every assistance should be granted to them. For the others, either because of age or circumstances who have to persist in their jobs, my hope is that the Ministry of Finance would ensure that fair and sympathetic treatment is meted out to them either in improving their working conditions or in alleviating the tediousness of their work through mechanisation or other improvements of the systems in which they operate. In fact, it is in a Department's self-interest to ensure higher productivity from its staff by introducing mechanisation and establishing better working conditions.

The Hon. Minister has acknowledged that there are shortages of officers in a number of Ministries. According to statistics given in the Budget for FY 78, out of 67,685 approved posts, there were 6,866 vacancies as at 30th November, 1977. The Ministry of Finance would do well to examine and identify the underlying causes for the relatively high number of vacancies in the Ministries of Health, Education and Home Affairs. It is not enough simply to carry out recruitment exercises all the year and repeatedly turn-up figures reflecting a high turnover rate of staff. Positive steps must be initiated to counteract the trend.

Being the largest employer, the Government should take the lead in introducing innovative measures to improve the skills of and working conditions for its employees, especially junior officers. Hopefully, the private sector will gradually follow suit.

Mr Deputy Speaker, Sir, the unions, both in the public and private sectors, are more than willing to give their full support in any such exercise. 6.30 p.m.

Mr Ivan Baptist: Mr Deputy Speaker, Sir, I rise to congratulate the Hon. Minister for Finance on a Budget that will add wings to the "Horse" and change its gallop to flight like the mythical Pegasus.

Mr Deputy Speaker, Sir, although 1977 was a difficult year and the world economic recovery slowed down and although the GNP of the seven major countries of the OECD grew by only 4%, Singapore has done well with an economic growth of 7.8% which is an 0.8% increase over 1976. This growth was achieved with relative price stability and the creation of 33,500 new jobs resulting in the fall of unemployment to 3.9%. All this has been the result of a sound Government with its sound financial policies and pragmatism, complemented by a resilient and hard working population. A further sound financial policy for 1978 backed by a people willing to meet challenges will see Singapore able to withstand the rigours of 1978 and next year we will be able to see the fruits of our labour and of our confidence in the Government.

Protectionism, Singapore being reclassified as a developed country, President Carter's proposal to end tax deferral, are some of the problems we are facing which could be detrimental to our achieving better growth rates in 1978. We therefore need to hasten the economical maturity of our skilled and managerial work force. To do this, we would also need expertise in these fields from developed countries. When attracting investment, it is necessary for us to ensure that Singapore is attractive for the expertise that must inevitably arrive to start off the industry. The better the calibre of the experts, the more advantageous will it be for Singapore and Singaporeans. This would necessitate Singapore being able to offer an attractive environment with all the necessary paraphernalia like easy commuting on roads which are not congested, private schools with adequate facilities, leisure and recreational facilities, and so on. In short, those who come to Singapore to work for overseas investors from developed countries must find in Singapore a life for themselves and their families equal to, if not better than, what they enjoyed at home.

Mr Deputy Speaker, Sir, the world is becoming quite concerned about the problem of exposure to noise both in the industrial and urban environment, Singapore is a city state. In a few years' time 80% of our population will be living in HDB flats. The proximity of one household to another has been reduced tremendously; coupled with this is the noise generated by modern household equipment like the television, radio, washing machine, vacuum cleaner and so on. Modern entertainment too produces noise, music to many, unfortunately, of very high levels. A survey conducted by the Industrial Health Department, Ministry of Labour, confirmed noise levels in discotheques to be well above 9OdBA. The Senior Minister of State for Communications did mention a figure of about 105dBA. In the United Kingdom, an article I read indicated that there is a real hazard of noise-induced deafness among people exposed to musical noise of a high level.

We need in Singapore to enhance our quality of life. Hence we should begin thinking of acceptable noise levels not only in our industry but also in our environment. Noise and vibration are regarded as the two factors that contribute to the pollution of the environment and have a detrimental effect on the health and comfort of the population. If exceeding certain thresholds, noise and vibration impair health and working capacity and produce from mere mental and physical inconvenience to severe organic disorders. 6.35 p.m.

Mr Seah Mui Kok (Bukit Ho Swee): Mr Deputy Speaker, Sir, I would like to join my colleagues in congratulating the Hon. Minister for Finance for presenting a reasonable and fair Budget to this House on 27th February, 1978, especially the reduction in the payment of personal income tax for the Year of Assessment 1978 and the various tax incentives to the corporate sector. Although the Hon. Minister for Finance has reduced rates on personal income tax, he has also increased a number of taxes on expenditure, such as, registration fee on private cars, entertainment duty, driving licence fees, telephone tax, colour TV licence fee and airport tax. Fortunately, he ended with one concession, i.e. the abolition of 5% tax on PUB bills for consumption levels between $35 and $50 a month with effect from 1st April, 1978. However, the Budget that he has presented to Parliament is acceptable to us, and I hope in the next Budget presentation, he will not further increase tax on expenditure! He should concentrate on the 150,000 tax dodgers.

Sir, in spite of the difficult international economic conditions, Singapore's economy grew by 7.8% which is slightly higher than 7% for 1976. In addition to this achievement, 33,500 new jobs were found in the commerce and manufacturing sectors. All these achievements have been made possible because of the Government's wise policy of diversified economy and dynamic drive in promoting local and foreign investments. It is also due to the Management for its capable and intelligent handling of business and to the workers for their hard work and productivity.

Sir, I fully agree with the Hon. Minister for Finance that unless the United States, West Germany and Japan adopt expansionary policies, the world economy will not improve in 1978. If the world economy collapses, there will be chaos and more unemploy- ment. The world is already over-populated. There are millions of workers being retrenched and they are waiting for new jobs. Several more millions of young people are also looking for jobs when they leave school, college or university. For these millions of unemployed people who are distressed, very frustrated and with empty stomachs, jobs should be created for them as soon as possible. I still believe the world economy will not collapse, especially if there is a kind of World Economic Aid Plan to be sponsored by Saudi Arabia, Iran, Kuwait and other Middle East oil producing countries, together with the United States, West Germany and Japan. Through this World Economic Aid Plan, it will definitely boost industrial growth and expansion, eliminate protectionism and reduce unemployment.

Sir, the Hon. Minister for Finance's 1978 Budget Statement stated that there is further progress in the ASEAN economic cooperation. There is also some progress in the ASEAN industrial projects. Since Japan has indicated giving financial assistance totalling US$l billion for these projects, I hope all the ASEAN leaders will expedite the launching of these projects which will give employment to the young people in ASEAN and strengthen the ASEAN economy as well.

Sir, I am happy to hear from the Minister for Finance that unemployment fell from 4.5% to 3.9% while labour productivity improved as a result of continued upgrading of skills. The commerce and manufacturing sectors have created 33,500 new jobs. With the yearly increase of young people leaving school, college and the university looking for jobs, the Government, employers and workers must continue the present tripartite co-operation to create another 35,000 new jobs for them in 1978. I hope we can achieve this target if we have the will, guts and determination to strive for it. Also, we must see to it that our population growth is under control and to accept the fact that two children for a family is good enough whether two boys or two girls, especially for the middle and lower income wage earners. Too many children will be a burden to the worker and will make life miserable for him, his wife and children.

Sir, the National Wages Council recommended that for the year 1.7.77 to 30.6.78, the national wage increase guideline be 6% with full offsetting of all forms of increases in remuneration on a group basis. It has been calculated on the basis of the increase in the total annual wage bill arising from not only annual increments but also all other forms of remuneration, i.e. merit and promotion increments and collective agreement on wage adjustments, and prorated bonus and annual wage supplements but excluding CPF contributions by employees, overtime payments and fringe benefits.

Sir, thousands of workers did not get a single cent of benefit at all from the NWC Wage Increase Guideline for 1977, because of the full offsetting of all forms of increases in remuneration on a group basis. Added to this disappointment, they have to contribute from their pay packet another 1/2% for saving in the CPF which has been increased from 15% to 15 1/2%. These workers are very unhappy. They ask: 'How can we save 1/2% of our wages for the CPF when we are not benefiting from the NWC Wage Increase Guideline for 1977? Why is them no NWC Wage Increase Guideline for the Managerial and Executive staff? Why is there no guideline when the companies are making bigger profits and therefore the workers should also get bigger bonus or Annual Wage Supplement? How can the same NWC Wage Increase Guideline be applied to all industries or business enterprises when comparing the profits of petroleum industry, banks and insurance companies with the small factories or small firms?' Surely the oil companies, banks and insurance companies can give better bonus or Annual Wage Supplement. However, if the workers are not going to get any benefit in the 1978 NWC Wage Increase Guideline, they should not be made to contribute extra CPF contribution.

Sir, when the NTUC gave full support to the need for increased productivity by the workers, the employers' group immediately echoed their consent. When the NTUC and its affiliates requested for the formation of a Productivity Committee to increase productivity, and to formulate incentive payment for the workers immediately you find a dead silence from them. In other words, their attitude is: 'You workers work harder; you increase productivity; we make bigger profit; Directors, Executive and Managerial Staff get bigger monetary reward. Shareholders get bigger dividend, but we pay you according to the NWC Annual Wage Increase. If you are not happy, you ask your NTUC and your Government!'

Sir, it is very hard to believe that the employers are willing to give serious consideration to reward the workers for their toil and sweat for increasing productivity. They are only interested in making more profit. They are not interested in establishing Productivity Committees or pay incentive payment for increased productivity. Sir, to prove what I have said, may I quote from the Straits Times report dated 10th March, 1978, under the heading "NPB ON DEARTH OF PRODUCTIVITY COMMITTEES". I quote:

"So far 28 firms or 0.56 per cent of the 5000 in Singapore has set up productivity committees since the National Productivity Board started a campaign to form such committees about three years ago." Perhaps, Sir, in another three years, i.e. by 1980, another 28 firms will form Productivity Committees! In fact, some of the present established Productivity Com- mittees of the 28 firms are not active at all, or may I call them "Coffee Talk Committees" just to give an impression that there is such a Productivity Committee in Company XYZ! It would be interesting to know how many of the 28 Productivity Committees have achieved increased productivity and how many incentive payments have been made to the workers.

However, let us see how much progress or success we can achieve from the coming two-day National Conference of Productivity Committees which will be held on 21st and 22nd April, 1978. I am sure there will be papers presented by various representatives for the participants to read, study and digest. After this Conference, I hope it will produce some good results and progress for the benefit of the employers and workers especially monetary reward to the workers for their sweat and toil to increase produc- tivity or else do not waste time or waste papers just for the sake of producing papers only. The workers want currency notes and not just printed papers.

Sir, may I quote what the Minister for Finance said in Parliament from the Hansard, Volume 36, No. 10, column 530:

'While workers must put in their best efforts, employers have an equal responsibility to improve their management of personnel or of plant and machinery to increase productivity. Employers should consider the introduction of appropriate incentive schemes to reward efficient workers for their productivity. The initiative for formulating such schemes is clearly their responsibility as they have the greater resources and experience in this area.'

Sir, representatives of the employers' group will present papers at the coming two-day National Conference of Productivity Committees as from 21 st April 1978, and if they have no incentive scheme to pay the workers for increased productivity, they are wasting the workers' time. Lip service will not help to increase productivity.

Sir, the presidents of the two associations, i.e. the Singapore Foochow Coffee Restaurant and Bar Merchants Association and the Kheng Keow Coffee Merchants Restaurant and Bar Owners Association, had admitted publicly in the Straits Times report dated the 8th March, 1978, I quote:

'it is true that the price of coffee beans has gone down from over $900 to over $400 per 60.5 kg. a drop of 50%. But before the adjustment of the price of a cup of coffee, coffee beans cost only between $180 and $200 for 60.5 kg.' Sir, the fact remains unshakeable that the price of coffee beans has dropped 50% and therefore there is no excuse for them to refuse to reduce the price of a cup of coffee by five cents.

Mr Deputy Speaker, Sir, I join my colleagues in support of the Financial Policy presented to Parliament by the Hon. Minister for Finance in his 1 978 Budget Statement on 27th February, 1978. 6.49 p.m.

Mr Teo Chong Tee (Changi): Mr Deputy Speaker, Sir, it is encouraging to hear that despite the poor shape of the world economy, we managed not only to hold our own but actually achieved a 7.8% growth. Obviously, the Government's monetary and fiscal policies have so far been very successful. For this, the Cabinet and in particular the Hon. Minister for Finance deserves our as well as the nation's congratulations.

On the strength of the Government's past achievements, I have every confidence that we will continue to do well. It is apparent that attracting new investments into Singapore is not an easy task. Advanced countries are being pressured into instituting protectionist measures to protect their own sagging economy. By using various means at their disposal, these advanced countries are making overseas investments financially unattractive. It is therefore incumbent upon us to offset this by offering potential investors a disciplined, hard-working and skilled workforce, a stable political environment and as an extra special effort to tip the scales in our favour, tax incentives like those proposed by the Hon. Minister for Finance.

With little to offer by way of natural resources, any serious reversal in the present influx of capital into Singapore will have dire consequences. The Government should be commended for this aspect of its tax policy.

However, the same cannot be said for some of the other tax changes that have been proposed. Although attempts are being made to make taxation more equitable, the steps taken so far do not seem to be very successful. The working population are paying their income tax faithfully, but this is not true with the self-employed and businessmen. Despite acknowledging the existence of tax dodgers, the Hon. Minister has not suggested any measure to bring them under this fold. Perhaps the Government could consider abolishing or modifying the present system of taxation and instituting in its place a system that taxes at source.

The Government's concern over the continued increase in the number of cars on our roads is understandable, but it seems to me that the only means known to the Government to discourage car ownership is fiscal in nature. Increasing the additional registration fee by 25%, 100% or even 200% will not affect the upper income group. They can still afford to buy new cars and probably will. For some of the self-employed, expenditure on new cars are listed as business expenses and therefore eligible for tax benefits. However, has the Government thought of the problems that have been created for those fellow citizens who are in the lower income group? To these people, transportation is equally important. If they are discouraged to own cars, the only means of transportation is the public transport. However, our present public transport system is still not up to the required standard. Thus, these people are subject to a lot of inconvenience because they cannot afford to own cars and on the other hand they cannot rely on our bus services. Perhaps the Government should defer increases in Additional Registration Fee until such time when the people can rely on the public transport system. Another method of limiting car ownership without creating problems for the lower income group is to have a discrimination in taxing motorist. For example, we can have a progressive form of taxation for motorists.

Sir, having had his vehicle taxes increased, the motorist finds that he now has to pay a 100% increase in driving licence fees. The point that the last revision was some 12 years ago is appreciated. But I Wonder what is the aim of the Government in increasing this tax. Is the objective of the Government to discourage people from getting a driving licence, or has the administrative cost increased so much so that licence fees have to be increased so drastically? We should bear in mind that many farmers, delivery boys and even lorry drivers need driving licences to earn their living. For them, to pay $10 more a year is not a small sum.

Over the past years, the Government has actively encouraged our citizens to appreciate some of the finer things in life such as music, drama and poetry. Officials from the Ministry of Culture have worked hard at organising concerts and recitals and establishing orchestras. Lately, even RTS announced the expansion of its FM stereo service. However, we are now told that there will be an increase in the Entertainment Duty which affect duty rates for cinemas, amusement parks, trade fairs and live entertainment such as stage plays, concerts, recitals, music performances and dances. If the increase in duty is not passed on to the consumers, we have nothing to grumble about. However, is the Government going to stand firm on this and make sure the increase in duty does not affect the consumers?

Sir, it is the aim of the Government to make Singapore a clean and green city and to achieve this objective a tax incentive was given to owners and occupiers of houses to encourage them to maintain clean and attractive gardens. Today we can see many houses maintaining attractive and clean gardens and this is largely due to the tax concession offered by the Government. Unfortunately, the Government has decided to take away this concession at this juncture when more people should be encouraged to make the living environment more congenial and pleasant. Will not the people neglect their gardens once this tax concession is taken away or has the Government now believed that maintaining a clean and attractive garden is part of the people's way of life?

Mr Deputy Speaker, Sir, it is my hope that the Minister for Finance would be able to devote sometime to devise a more equitable means of taxation. 6.57 p.m.

Mr Ch'ng Jit Koon (Tiong Bahru): ( In Mandarin): Mr Deputy Speaker, Sir, when the budget was presented by the Finance Minister last month, the Minister made a comprehensive survey on the economy of Singapore. He also made out the prospects of our economy this year together with an appropriate and realistic appraisal of the various problems that we have to face in the next two to three years. He has given a good analysis of the whole situation.

Throughout last year, despite the world economy still in a state of stagnation and a very slow recovery of economic growth, Singapore's growth rate has been better than that in the advanced countries of the world. Our GDP increased by 7.8%, which is higher than the average growth rate of the countries in the world. For Singapore, a small island country without natural resources and independent for 13 years, it is quite a great achievement to be able to attain this growth rate in spite of strong protectionist pressure and sluggish economic growth of the major industrialised countries in the world.

Sir, this achievement is mainly attributed to the foresight of our Finance Minister who has adopted a realistic and enlightened policy to seize whatever opportunities advantageous to Singapore to promote our economic activities. He has also been able to take the necessary measures to cope with the ever changing situations in the international scene. On the domestic scene, the Government has been able at the same time to maintain political and social stability to provide a good investment climate. With the cooperation and effort of the Government, the employees and the employers, productivity has been increased, and it is through the hard work put in by the tripartite parties that we have been able to tide over many difficult times. This has come about definitely not by luck or chance.

On the whole, the Budget presented by the Finance Minister reflects the wisdom of the Government, particularly in respect of tax adjustments which have great significance. The reduction in income tax and the increase in consumption tax is one of the main features of this budget before the House. It has significant merit in encouraging savings by the people. The reduction in personal income tax is also a piece of good news to the general wage earner. This measure reflects the intention and the determination of the Government to rationalise the tax structure in Singapore to bring about a more equal and just society. For the middle and upper middle income groups earning between $40,000 and $80,000 there will be a tax reduction of 10%. This is to prevent brain drain from this group of professionals on the one hand and to encourage greater and positive contribution from them on the other. In addition, this will assist in the further development of Singapore as a services centre.

In his Budget statement the Finance Minister stated that in the new financial year the main industrial thrust will be to develop products that will be less sensitive to the political climate in the industrial countries. This is a correct measure. Only with this measure will we be able to find an outlet for our products in the face of increasing trade protectionism. For example, in the recent signing of the textile agreement with the United States, it is only after our textile manufacturers have agreed to reduce the quota of the items sensitive to the political climate in the United States that they have been able to get increased quotas of less sensitive items.

In the Budget statement, the Finance Minister also stated that he would welcome multi-national corporations, and medium-sized and small-sized industries into Singapore to strengthen our industrial base. No doubt, multi-national corporations do make some economic contribution to our country and with our local existing medium and small-sized enterprises these two do complement each other. However, to a certain extent, are the multi-national corporations not strong competitors to the latter? It is my hope that the Government would look after these local medium- and small-sized enterprises as they are smaller in size and financially not strong enough and theref6re likely to become victims of this unequal competition. With the Government's assistance, they will be able to contribute to Singapore's economy.

Over the past ten years or so, our emphasis has all along been on industrial development. At present, major industrial establishments are to a large degree as a result of foreign investments. Even in the case of joint ventures, they are mainly joint ventures between foreign capital and the Government. Local capital participation is still not ideal. I feel that the Government is not giving enough encouragement to local capital participation. While we could not deny the importance of foreign capital to our economic development, there should also be more local participation in our industrialisation. The mobility of foreign capital is high, because profits are the main consideration. If there are profits, it will stay. If there are little or no profits, it will run away. But it is different in the case of local capital, simply because local capital is deeply rooted. It just cannot run away. It is an integral part of our economy and grows with it. Therefore, it will be a judicious measure to give greater encouragement and assistance to our local capital to participate in industrial development.

While touching on industrial development, the Finance Minister has also directed his attention to trade development. This will strike a balance in our economic development. However, on trade development the Finance Minister has given emphasis only on the promotion of export of industrial goods. All along, we have been giving the same emphasis when allowing deduction of double taxation for the participation in international trade fairs and trade missions abroad. The reduction of double taxation for permanent trade offices abroad for the first two years is also in the same vein. No adequate attention therefore has been given to our entrepot trade and trade with third world countries. Our entrepot trade has maintained our economic life-line over the past century. It is therefore regrettable that the concessional rate of 20% company tax is only applicable to offshore trading in respect of non-traditional commodities. It is said that over the past few years, because of our tax measures, many traders dealing in traditional products like rubber, copra, palm oil and pepper have shifted their operation base to Hong Kong. This shift is not only a loss in terms of revenue to Singapore but also in terms of other chain benefits, such as banking, financing, insurance and shipping businesses. I therefore hope that the Finance Minister will also grant this concessional company tax rate to such offshore trading companies dealing in traditional products.

Sir, over the past few years, with the concerted effort and cooperation of the various quarters, Singapore has been able to make progress in adversity and difficulty. With continued efforts and further cooperation from all concerned in the direction of our laid down development policies formulated in the interest of the people and the country, we will be able to move ahead together towards a more stable economic foundation and establishing a more fair and sound society, thus making Singapore a healthier and more progressive country. 7.08 p.m.

Mr Tan Soo Khoon (Alexandra): Mr Deputy Speaker, Sir, I rise in support of the motion standing in the name of the Hon. Minister for Finance.

In the past fortnight or so since presenting his Budget for FY 78, the Hon. Minister has received more than his share of bouquets and brickbats. Some have called his Budget a "happy surprise" while others have accused him of taking back with one hand what he dishes out with the other. His is not a job that most of us would envy. He knows he cannot please everyone.

The cautious optimism that was reflective in the Minister's Budget statement of last year is again evident this year. He is right when he says that 1978 "may turn out to be a difficult year". Unemployment in developed countries and the tendency towards protectionism are two of the factors that he has pointed out and which would make it more difficult for us to export. Aside from these, there is the problem of unstable currency exchange rates. The US dollar continues to fall and it is now a question of whether or not the US Government will quickly take measures to stop it from collapsing. One can well understand the plight of oil-rich nations who are seeing their dollar reserves dwindling in value day by day. Some of them are already pressing for a revision in the price of oil and are even thinking of abandoning the US dollar in favour of another currency for their oil transactions. An international monetary disorder may just result. The increase in the price of oil, which was tactfully avoided at the end of last year, may just occur in the coming months as those who have been pressing for the increase in price have even greater grounds to do so now. One can well imagine the economic crisis that can come.

All this means we face a year of grave uncertainty. But no doubt the measures in the economic strategy of our Government will enable us to overcome some of the difficulties that lie ahead.

One of the principles underlying our democratic system is that those who are given the powers and the authority to discharge their responsibilities are also held accountable for the manner in which such responsibilities are discharged. In our parliamentary system a Minister is empowered with the administration of his Ministry. He is in turn accountable to Parliament for whatever is done by, or in, his Ministry.

It has however been recognised by many governments that certain functions cannot be performed efficiently and expediently if these are to be carried out amidst bureaucratic red-tape which is so characteristic of Government departments. Such functions are normally those of a commercial nature such as the provision of air services in competition with other airlines, or of an industrial nature. Or it may be a function involving the Provision of gas and water, or the promotion of sports or certain cultural activities. In all such instances Government has been able to Circumvent administrative rigidity by enshrining these functions in statutory boards or Government-owned enterprises. Of course there are other reasons for doing so, such as the need to identify precisely cost and revenue elements, which may not be easily done in government departments.

But while this device may result in efficiency in that the responsibilities can be carried out expediently, the accountability of such institutions remains debateable since they are now invariably removed from the rules and regulations which first bound them but which can no longer be applied to serve as a check on their performance.

Statutory boards in Singapore are accountable to Parliament. They are created by Acts of Parliament. Their objectives are debated upon. The line of accountability is clearly established. Each statutory board is answerable to Parliament through its Minister in charge. Their annual reports are tabled in Parliament. Their accounts are audited by the Auditor-General and are scrutinised also by the Public Accounts Committee which is empowered to call up officers and papers of the boards for examination.

By this manner of accountability, those who have been delegated the powers to discharge their duties are also required to give explanations as and when required. Where there have been abuses and excesses, the findings are transmitted by the Auditor-General or the Public Accounts Committee to Parliament.

But in the case of Government-owned companies, the situation is in contrast. In the first place they are formed by simply registering with the Registrar of Companies.

The reasons for forming such companies need not be debated upon; on the contrary the public may not even be aware that such-and-such a company has been formed. Its policies and activities may not even be known. This must be viewed with concern especially when public funds are being used in forming the capital of such companies. Secondly the manner in which such public funds have been used in order to attain the objectives of the company cannot be questioned. The accounts are not audited by the Auditor-General; neither are they presented to Parliament.

It is true that they are audited by commercial auditors but audit by commercial auditors and audit by the Auditor-General are two different things. For one thing, the commercial auditor is more concerned that accounting procedures are carried out in accordance with accepted accounting principles and standards, the Auditor-General of the country is concerned with matters such as wastage and irregularities. Without having to go into further details regarding these two different types of audit, it would suffice for me to say that a commercial audit of a Government-owned company would certainly be inadequate in providing for even the tiniest measure of accountability.

To be fair, Sir, I am sure that our Government-owned companies are accountable to their Ministers-in-charge but the questions are, to what degree are they accountable, and how effective has the accountability been? Does it mean only the presentation of annual financial statements showing healthy profits?

Again to be fair, Sir, Ministers have in fact answered questions posed in this House in relation to Government-owned companies. For instance, recently the Honourable Minister for Finance has answered questions on companies such as Sugar Industry of Singapore and Singapore International Airlines but it is clear that he can choose not to do so if the answer required of him entails disclosure of commercial matters that would be useful to competitors. The lines of accountability are therefore vague. Parliament cannot debate on the need to form a company, or the objectives and policy of a company. I cannot help but just reflect on the decision of the Port of Singapore Authority to form Changi International Airport Services to provide ground services at the new Changi Airport. Should not Parliament debate on such a decision while it was in its proposal stage?

Many questions can be asked: Is it not sufficient for Singapore Airport Terminal Services to provide this service? Why allow a port authority to provide airport services? Why allow one Government-owned company to compete with another? Above all, why duplicate your investments?

There is no doubt that lines of accountability and I mean effective accountability must be clearly established. This must start with Parliament voting on the capital investment, and debating on the formation of such companies. The auditing of the accounts of such companies by the Auditor-General whose report would supplement those of the commercial auditors would be presented to Parliament for scrutiny by the Public Accounts Committee. Close monitoring of policies and activities and evaluation of performance can then be better achieved.

But in ensuring this measure of accountability, caution must be taken that this does not result in rigid control that would strangle the efficiency of such companies. One must remember that a Government-owned company competes with others in a free market economy, and too rigid a control for the purpose of ensuring accountability would only bring it back to the very same situation which by its formation it was trying to avoid, and would tantamount to strangling the life out of it. Somewhere along the line there is a need to strike a balance.

Where is the trade-off point where the rules can provide for the accountability of those who have been entrusted with wealth not of their own and who have been empowered to utilise such wealth, without unnecessarily stifling the initiative, enthusiasm and efficiency that are so necessary if at all the results that are desired are in fact to materialise? This is the delicate question which I hope will generate food for thought. It is a question that must be asked now if we consider the mushrooming of Government-owned enterprises over the past 10 years. It is perhaps even more delicate a question if you consider that some of these enterprises are wholly Government-owned while some are joint ventures between the Government and the private sector. Some distinction in the extent of accountability between these two types of Government companieS have to be made. It is a question which, as of the moment, cannot be easily answered, but I hope that some thought will be given to this question.

Mr Tan Cheng San rose -

Mr Deputy Speaker: Before I call on the Member for Paya Lebar, may I just remind Members that the debate must stop at 7.30 p.m. so as to allow the Minister for Finance to reply. Mr Tan.

7.18 p.m.

Mr Tan Cheng San (Paya Lebar): ( In Mandarin): Mr Deputy Speaker, Sir, I support the Motion for approval of the financial policy of the Government, moved by the Finance Minister on 27th February, 1978.

Sir, in the midst of slow economic growth and increasing protectionism in the advanced industrial countries, we are glad to hear the announcement by the Finance Minister of certain tax concession measures for the benefit of the people, such as the lowering of personal income tax, abolition of the 5% tax on PUB bills for those whose monthly consumption is between $35 and $50 and other tax concessions for companies. The adjustments in the additional registration fees of private cars and colour TV licence fees, etc. are also very timely measures, as all these are a step towards the rationalisation of our tax and revenue structure that will be beneficial to our people.

Sir, as we all know, all these years personal income tax has been a matter of great concern for our people. Because of the success of our industrialisation programme, economic prosperity and the continued flow of foreign capital into Singapore, the incomes of our people have risen over the past 10 years. So the tax base has been broadened to include more wage earners. This is one of the main sources of revenue for the Government. Obviously, the announcement of a tax reduction will benefit the great majority of wage earners. The next announcement regarding the abolition of 5% tax on PUB bills on consumption between $35 and $50 is yet another measure that will benefit wage earners generally and will certainly be welcome by the broad masses in Singapore.

Mr Deputy Speaker, Sir, in my humble view, the increase in the Additional Registration Fee on private cars is also reasonable and in keeping with the Government's policy of encouraging greater use of public transport. But as for the increase in driving licence fees, I hope the Government will give special consideration for the professional drivers.

With regard to the increase in the licence fee for colour TV, I think it is also reasonable.

On the question of company tax, the investment tax credit scheme and other tax incentives, I think they are a step in the right direction as they will promote the development of manufacturing and servicing sectors in Singapore, attracting more local and foreign investments, thus creating more job opportunities for Singapore. But I would like to point out that while the trade unions are promoting workers' productivity very strongly it is regrettable to note that some employers are not very enthusiastic and nonchalant about productivity councils or committees. Therefore, I think the Government should take a more positive step to further increase the understanding and interest of the employers on the importance of productivity. Only then will our manufactured goods be able to compete favourably in the competitive international markets. 7.24 p.m.

Haji Sha'ari bin Tadin (Bedok): Mr Deputy Speaker, Sir, allow me to make some comments and observations with the little time at my disposal, and I shall try to be as brief as possible.

Sir, the budget has been described by a leading newspaper as "being pragmatic and appropriate" and also hailed by business circles as "fair". One thing, Sir, which struck me and many of us both inside and outside the House is the unexpected "tax concessions" in personal income tax which came rather as a surprise. Here, Sir, I would like to quote the Finance Minister's remarks, inter alia, "the need to reward effort whether manual skills or intellectual discipline and at all levels," is well taken. The Government was prepared to lose $53.9 million in the first year and this gesture was welcomed by all of us in this House as well as those 26% of the work-force who are paying annual income tax. Much to everyone's relief it comes at a time when Singapore's economy is slowly picking up. The 7.8% growth achievement for the year 1977 was, in fact, a satisfactory performance considering the year was a difficult one.

Looking at the prospects for 1978 the Minister predicted that this year 1978 may turn out to be a difficult year in view of the protectionist measures taken by developed nations against our products. As rightly pointed out by the Minister, if this tendency towards protectionism increases our own exports will be greatly affected and we may be in for hard times. However, Sir, the economic strategy and measures, like diversifying our economy and moving into higher technological and more sophisticated products as outlined by the Minister, will put us in good stead and Singapore's economic prospects will not be that gloomy in the coming years.

Sir, there is one disturbing fact of the Minister's Budget which he pointed out posed a threat to our economic growth, i.e. the reclassification of Singapore as a "developed country" according to IMF yardstick. Our per capita income, which is second only to Japan because of our high GNP growth and our much publicised success story, has earned us the reputation of the most "developed" of all developing countries in the Third World countries. However, I do not think it is to our advantage to be reclassified as a developed country like the advanced and developed countries in Europe and North America. We have quite a long way to go to achieve the same level as that of the countries mentioned. We have enjoyed a good measure of political and economic stability making us unmatched not only in all Asia but also in almost the entire world. However, the fact still remains that Singapore is a city state with no natural resources to depend on and our economy is so vulnerable to external factors.

Mr Deputy Speaker, Sir, may I now touch on another aspect of the growth and prospect of our Budget, i.e. our industrial development. In this respect, Sir, I must commend the efforts made by the Economic Development Board in their promotional efforts to get more investment to Singapore. The steps taken by the Minister to improve upon the present incentives in the Economic Expansion Incentives Act by introducing an investment credit scheme in order to allow the local and foreign companies to expand is definitely a big booster and will help our economy tremendously, especially in the field of industrialisation. The other thing, Sir, the financial assistance to be extended to our local entrepreneurs who wish to enter into business of their own after acquiring the necessary skills will be most welcome. Singapore as a city state with no natural resources will have to push its market through participation at international trade fairs and trade missions abroad. In this respect, Sir, the Department of Trade which carries out this function of export promotion must be commended for its relentless effort in trying to sill and find new markets for our Singapore-made products.

From the account given by the Hon. Minister in his Budget and financial policies, it is clear that our main economic growth seems to be in the services sector (mainly in commerce and transportation which accounted for 64% of the increase). It is therefore important and necessary that our efforts to make Singapore a financial, convention, warehouse and services centre be stepped up, especially when we also face competition from cities like Hong Kong, Manila and Tokyo. The measures taken by the Hon. Minister to reduce the company taxes and other tax concessionary measures auger well for the future of Singapore.

Sir, Singapore's economic success and rapid industrial growth were not due to miracles but through hard work and pain-staking effort on the part of our economic planners. Yet, today, Sir, many Singaporeans take our success story for granted. For example, the recent outbursts and comments made by some students of Junior Colleges over the long stay in campus is a case in point. These youngsters should be grateful for what they are getting or enjoying.

Sir, speaking of tax increases introduced by the Finance Minister to recover the loss in revenue, I share the views expressed by Members of this House.

As a closing remark, Sir, may I make one final observation. To many Singaporeans, only the tax concessions interest them. They do not realise the full implication of the Budget. They are only interested in what way the tax concessions affect their income and expenditure. Other than this aspect, very little is discussed in terms of economic growth. What more when the Budget language is such that it is full of economic terms such as GNP, GDP, etc, which mean very little to the man-in-the-street. Sir, if I may suggest (whether this comes under the purview of the Ministry of Finance or Education) that informative booklets to explain in very simple language, the implication of the Budget, be brought out so that even secondary school children can understand it. The Budget has always generated interest amongst certain people but the time has come for us to make the Budget better understood among our young and the not-so-well educated. Perhaps, the Press would start a series called "Understanding Our Budget" to achieve this. In this way, more of our people will appreciate the efforts made by our Government to achieve greater economic growth. 7.28 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Deputy Speaker, Sir, first of all, I would like to thank all Members again for their most interesting and valuable contributions to the Budget debate this year. In spite of many critical comments and some reservations, the general impression which I received from the remarks was one of general approval for the Government's economic and financial policy. Contrary to what one or two Members have stated, I have listened most carefully to all the remarks and I can assure Members that they have not fallen on deaf ears.

With regard to the remarks I made in the Budget Statement, the opening section was On economic growth. While some attention has been given to this part of my Budget Statement, I think it has perhaps aroused less interest than others. Most Members were congratulatory of Singapore's attaining a 7.8% growth in spite of the very difficult conditions. One or two Members thought that the achievement of favourable growth rates was to be expected and that the remarks which were made in the Budget Statement, or perhaps in public statements by other Ministers, have been rather too scary to be true - that the warnings of economic difficulties to come should not always be accepted and that the performance can always be expected to be better than the expectation. I will only remind Members that two years ago we had a growth rate of only 4% so that if we are not to revert to growth rates of this order, we will have to continue to be vigilant, I do not wish to touch in the very short time at my disposal, on the many remarks which have been made on this part of my Budget Statement. In any case. some Members have already partly done my job for me, and perhaps better than I can do myself. I will therefore confine myself to matters which have not yet been touched upon.

First of all, with regard to trade restrictions and protectionism. Many Members have referred to this and the need for getting away from textiles which have given us some problems and will continue to do so in the future. I think this is only prudent and that we should move as rapidly as possible to very less sensitive products. There was general support for my views on tax deferral and on ASEAN matters.

On productivity, the Member for Aljunied, the Member for Paya Lebar and other Members too complained about certain sections of our employers who were not perhaps quite as enthusiastic as they would like on the need to increase productivity. I am most gratified to note the very strong support of the NTUC on this particular aspect of our economic policy. I have no doubt that the more enlightened employers also welcome this attitude of the NTUC and will be gratified with such a response which in many countries is not to be expected. There are, of course, already in many companies those who are convinced of the need for greater productivity, not excluding the Governmentowned companies, especially the shipyards which have done more than pay lip service to the idea and have shown their enthusiasm for it in the form of currency notes, as one of the Members wanted, I am sure this example will be followed by very many employers.

The Member for Boon Teck complained that the ITB training was not available for industrial workers because they were not able to take advantage of training schemes as many workers were on shift duty and therefore could not even attend those training schemes after office hours. This is a matter which will surely be given attention. This particular subject was also given attention by the Member for Bukit Merah. I certainly agree with him that plans for the further development of skilled personnel should, be given more emphasis. I hasten to assure him that the brief treatment of this matter in my Budget Statement does not mean that the highest priority is not being given to it.

The Member for Bukit Ho Swee expressed some dissatisfaction with the National Wages Council's guidelines and the increases which Labour has obtained. I hope his representations can be made more forcefully, and I am sure they will be given full consideration, in the NWC itself. I am in agreement with the need to increase more local investments. I cannot agree, however, with the Member for Tiong Bahru that I should give concessions to present businesses in the entrepot trade. The whole purpose of giving concessions is that they should be induced to go into additional lines of activity, and I hope that the present entrepot traders will move into those areas.

As for the criteria for tax concessions for the brain industries, or the industries for off-shore trading, the intention was that there should be a greater concentration of expertise and effort, and a merger of many different kinds of expertise into a bigger company which would then be enabled to operate effectively overseas. I hope that Singapore will be able to develop some trading corporations of the kind that the Japanese or the Koreans at present have, which do not mean just one or two traders but a whole body of experts in marketing as well as in packaging, distribution and perhaps even going backwards into manufacturing.

I would now like to turn to the Budget. Representations from Members on this have been very few. Perhaps I have missed a few remarks, but only two have been noted by me. The Member for Kallang submitted some interesting tables on public finance. I have not checked the figures but I think they are substantially correct, although a brief glance at the section on Public Finance in my Economic Survey indicates that perhaps we do not agree on the figure for 1975, where the Overall Surplus was given as $740 million in my Economic Survey against a somewhat lower figure in his Table 11, which is $142 million. His figure of $189 million more closely agrees with the figure of $188 million in Table IX of my Economic Survey. But in the analysis on Public Finance, it has been shown in my Economic Survey that overall for the public sector there is, in fact, a deficit. I would refer him to cols. 485-6 of the Economic Survey.

The Member for Bukit Merah spoke of the need for improvement of schemes and conditions of service for the lower echelons in the Civil Service and the need for improvement of the machinery of Government. This is a matter on which I have the fullest agreement. This will be given attention in due time. The need for innovative measures is certainly very much accepted.

The Member for Alexandra raised the problems of the accountability of statutOry boards and Government-owned companies. I had the impression that he was satisfied with the position as far as statutory boards are concerned but he was not quite so happy about the accountability of Government-owned companies. I am not exactly clear what the Member intends. The desirability of the formation of Government-owned companies is, of course, a matter for the Ministers of the various Ministries or, if there is any dispute as to whether there is a need for such companies, then the matters can be resolved by the different Ministries concerned. I am not sure whether the House ought to be in a position to monitor and take over the decision-making job or, in fact, the management of such companies. If, of course, there are irregularities or failures on the part of such companies, the House is always at liberty to put the Minister concerned on the carpet.

I now come to the part of the Budget which seems to generate much greater interest, the sections on taxes. The reaction of Members has been rather varied. Many seem to approve certain taxes. Others seem to find some objection to them. Only the Member for Anson, I believe, appeared to approve all the measures, very generally. The Member for Khe Bong was perhaps the most critical.

Mr Ho See Beng: It is because I love you more than they do!

Mr Hon Sui Sen: He spoke of this as being capitalistic. I ought to remind him that the allocation in our Budget for social expenditure is now very much the largest of all the allocations. It is in the region of 40% and if this is capitalistic, then I do not know what would be more socialistic. The fact is that many of these social expenditures require a viable economy to be able to sustain them, and I make no apologies for the nature of the Budget which has been presented here.

Sir, of the incentives which have been offered, there was fairly general approval of the tax incentives for companies and of the need which I expressed for expansion of the economy by inducing more investments, particularly in new industries.

There was some criticism, however, of the implementation, particularly the delay in getting schemes moving and in getting better results from these schemes. The Member for Jalan Kayu suggested that we have delayed the implementation of the credit scheme for exports and that the result for the small industries scheme was rather meagre. I myself would be very happy if we could get more action moving on some of these schemes. The problem is that we have to rely on the private sector for some of these schemes to be implemented. For example, in the small industries scheme, we would like a lot more small entrepreneurs, small industries, to make applications. The funding of these entrepreneurs and schemes would be no problem. It is a matter of getting enough projects and getting good projects. On the other hand, we do not want to just give money away. We want to make quite sure that the schemes are viable and that the people to whom we give the money will learn how to run a viable business.

The concession on personal income tax was not so generally well received. Some Members were dissatisfied with the distribution of the reductions in tax. Obviously, if one is paying very little tax, it is not possible to reduce it very much. So for the lower levels, the absolute amounts must be much smaller. If one is paying only $50 in tax, it can only be reduced by $50 at the most. On the other hand, if one has an income tax payment of $50,000, the amount that can bo reduced must be considerably greater. In percentage terms, I think we have tried to be equitable in the reduction of tax. Of course, it is not possible to satisfy everyone. If there are any suggestions for a better method, in spite of the fact that I am accused of not listening to Members' representations, I will be very happy to consider them at the next budget presentation.

There was some reference to the 150,000 potential taxpayers. I hasten to assure Members that while it is administratively and economically not very practicable to bring all the 150,000 potential taxpayers to book, in the more flagrant cases I think we will be very happy to make an example. Many budget sessions ago, I asked Members for names so that our Income Tax Department could pursue the question of taxes which should be imposed upon certain occupations. I have not received a single suggestion so far. But I will be happy to receive them even at this date.

The consumption tax aroused much greater heat. There were a number of comments on entertainment tax. I congratulate Members for being so culture-minded as to suggest that all the cultural shows should, in fact, not have the entertainment taxes increased. I do make a distinction between cultural shows and shows in nightclubs. In fact, most cultural shows are exempt from entertainment duty and I give Members an assurance that the exemption will continue for cultural shows.

So far as consumption taxes are concerned, I must remind Members that there is no need for anyone to pay these taxes. The way to avoid tax is very simple. Just do not pay. You do not have to buy a new car. In any case, the increase in ARF is only for people who want to buy new cars. There has been no increase in the expenditure for people who are already motorists. The need for this particular tax is clear from the figures of car registration which have been coming in over the last few months. There has been a considerable net increase in the number of cars registered and apparently, just like in the case of tobacco, people have got accustomed to the tax and are now going back again to the previous frequency of expenditure. Therefore, with the amount of money which has been released by reductions in personal income tax, there are very few more likely consumption expenditures which people in those income tax bracket are likely to want to splurge on. I am sure that motorcars, like in many other countries are items which very few people give up until the very last. So it is very necessary that these particular increases in the ARF should be imposed.

On colour TV, I was very careful, because of the increase in entertainment tax, not to impose too high a tax on colour TV licences. The increase is only $18. I thought the first reaction of many people was correct - that this is a very small increase. A lot of people expected that the increase would have been not 50% but 100% or even 200%. $18 works out to $1.50 a month. I am sure anyone who purchases a colour TV set should be able to afford this. In fact, I was a bit surprised that Members did not, as I expected, compliment me on my moderation in this respect although the Member for Paya Lebar was one of the exceptions. He thought that it was very reasonable.

I was a bit surprised that among the tax concessions which were withdrawn, the Member for Serangoon Gardens, the Member for Changi and maybe one or two others spoke against the withdrawal of the concession for gardens. The amount which was given did not I think make very much difference to the people who own gardens and therefore I did not expect very much of a reaction. I must say that I am rather pleasantly surprised.

There were a number of novel suggestions for future concessions; one of these was the question of works of art being eligible for tax concessions. I must say that this would be one of the last articles that I would have thought of. But I will certainly give this some consideration when the proper time comes.

Mr Deputy Speaker, Sir, I think I have concluded my speech. I would merely want to end by making two quotations. One is that there are only two things certain in this world - death and taxes. I hope Members would accept that taxes must be paid. I have authority for this in St. Paul's epistle to the Romans. This is in a very modern translation of The New Testament. It is paraphrased, and it says:

'Obey the laws, then, for two reasons: first, to keep from being punished, and second, just because you know you should.

Pay your taxes too, for these same two reasons..... Pay everyone whatever he ought to have: pay your taxes and import duties gladly.'

Question put, and agreed to.

Resolved,

That Parliament approves the financial policy of the Government for the financial year 1st April, 1978 to 31st March, 1979.