ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Question again proposed.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, I rise to join my colleagues on the Backbench in congratulating the Hon. Senior Minister of State for Finance for the painless and mildly pleasurable Budget Statement he delivered on behalf of the Hon. Minister for Finance on 5th March, 1979 in this Chamber.

The Statement reminds me of the emphatic point made by the Minister for Finance in this House on 28th February, 1977, that "we have laid a sound foundation for sustained growth through the five basic elements of our long term development strategy." He hoped to achieve an annual growth rate of 6 - 8% then. The result for 1977 was 7.8% which was slightly higher than the 7% achieved in 1976. And last year the Singapore economy grew by 8.6%. This is indeed an achievement. However, the Senior Minister of State did not make a forecast on the growth rate for 1979 except to point out that "in the Year of the Goat, we should not lack the resilience, adaptability and co-operative effort to make 1979 another good year." He has only cautiously pointed out that "in 1979, the world looks like becoming a more difficult place to make a living in." Perhaps he has got good reasons for not making any forecast on growth at all since this is the first time he is delivering the Budget Statement on behalf of the Minister for Finance.

But, Sir, before I submit my humble comments on his statement, I would like to refer to the Radio and TV forum entitled "Budget 79" held two nights ago in which the Senior Minister of State for Finance was put on the carpet before a seven-man panel to discuss the impact and implications of this year's budget. Personally, I welcome this new approach. What I wish to ask is whether the hour-long discussion is sufficient time enough. After all, it should be noted that Parliament had to be adjourned till today for the debate on the Statement.

With that, Sir, I come to my observations on some aspects of the Budget Statement. First of all, whilst the Budget Statement inflicted no pain but mild pleasure, I hasten to ask the Hon. Minister whether he will assure the House that no "pain" will be inflicted between now and his next Budget Statement. I can safely assume that he will give no such assurance because in reply to a question from the panel the Senior Minister of State indicated a possible price hike on energy. This caused me to read the Budget Statement again; and I notice that mention was made with regard to the "4-stage oil price increase totalling 14.5% in 1979 by OPEC", as well as the more sombre "prospect of a world oil shortage following disruption from Iran." Towards this end, the Senior Minister of State at the forum merely exhorted that "we should step up efforts to economise on the consumption of oil and electricity."

Does this mean that we are able to withstand such increases? Will not Singapore's economy be affected by these increases? I would also like to believe that such hike in oil prices will affect our economy; more so with the prospect of an oil shortage. So I would like to ask what provisions have we made in this respect? Further to this, in the 11 o'clock news brief this morning, it was reported that the Japanese Yen has weakened against the US dollar because Japan will most probably face the problem of oil supply. The impact will be felt by the industries in Japan which rely very much on an adequate supply of oil. In fact, just now before the House adjourned for a short tea break mention was made by the hon. Member for Kolam Ayer that Japan consumes or imports 99% of her oil needs. The Japanese economy is likely to be seriously affected in this respect, if what is conveyed over the news is true.

Sir, with that I come to the question of protectionism which has already been touched on by several colleagues of mine on the Backbench. In his statement, the Senior Minister of State has referred to protectionism now being extended to the air and he pointed out that "Singapore together with ASEAN and the Group of 77 developing countries must resist the protectionist tendencies of developed countries and help bring about an international order that will benefit the developing countries." I fully agree with the stand, but may I ask what form of resistance Singapore can pursue? Would it not be better to look for other solutions to overcome the protectionistic climate caused by the developed countries? One solution, if I may venture to suggest, would be for ASEAN to stand united and work closely with the Group of 77 developing countries with a view to exploring the ways and means to check against such climate. For ourselves, we should be more than prepared to acquire further knowhow or new skills in our export-oriented manufacturing sector whose products are not politically sensitive to the developed countries.

Therefore, until and unless ASEAN together with the Group of 77 developing countries can show themselves to the developed countries that it is futile and not to their ultimate interests to embark on such policies, I am of the opinion that these developed countries will continue to exploit the Third World for their own interests, be they short-term or long-term.

Now, the question of ASEAN economic cooperation. It is gratifying to note that last year further progress has been achieved in ASEAN economic cooperation. It shows ASEAN's maturity in being able to function in regionalism within a short span of some 12 years, and this is indeed a matter of quiet satisfaction to the peoples of ASEAN.

Apart from this, I would like to refer to my remarks made on 14th March, 1977, contained in Hansard, Vol. 36, col. 889, when I touched on the need to "laying greater emphasis on bi-lateral and multi-lateral trading arrangements with ASEAN countries." Now, apart from the Preferential Trading Arrangements concerning more items to be exchanged, I would like to know whether further progress has been made with regard to across-the-board agreements on the reduction of certain tariffs with our ASEAN partners.

I would now like to touch on Tax Changes. Whilst I appreciate the increase in the allowable deduction for statutory CPF contributions, to $5,000 per year, I would refer the Senior Minister of State for Finance to his statement made in this House on 14th March, 1977 when he was on this side of the House. This can be found in Vol. 36, cols. 831 to 836. His remarks centred entirely on an appeal for an increase in personal and earned income reliefs. He had made out a very strong case in this respect and, in fact, he had supported it with a Table of Comparison of Tax Liabilities and Disposable Income between 1972 and 1976 (Appendix II, cols. 907 to 908 of the same volume) and to quote him: "This argument was basically sound but it was not carried far enough." I think the House will agree with me that he has carried it succinctly far enough, and I would like to enquire whether he still subscribes to this view.

An hon. Member: No.

Mr Ng Kah Ting: Sir, by this, I do not mean to be disrespectful, but I would like to remind him that the purchasing power of our dollar has been somewhat eroded further.

On another aspect of tax concession concerning house ownership, I wish to seek further elaboration and clarification on the increase with regard to exemption from estate duty, i.e. "any one house in a deceased's estate subject to a maximum value of $200,000." Also, "The exemption limit of $200,000 for the house will apply to the full share of any one house in a deceased's estate." And, "If the deceased is a part owner of a house, the exemption will depend on his proportionate share of that house." In the view of the Senior Minister of State, "this should cover most public and private flats, and terrace and semi-detached houses." May I suggest that it is best not to specify the number of residential properties that qualify for exemption so long as a person is able to enjoy the exemption limit of $200,000. In other words, it should best be left to him to do what he wants.

Now, Sir, another point concerns the inter vivos gift of a house. The Senior Minister of State said:

'A house which is given as an inter vivos gift will not qualify for the exemption, notwithstanding that the value of the house is included in the valuation of the estate if the gift is made within five years of the date of death.'

Now, Sir, for the purposes of estate duty any gift inter vivos does not take effect until five years after the date of the gift. That is to say, if the donor dies within five years of the date of the gift, his estate will have to pay estate duty on the whole value of the gift and yet his estate will not get the benefit of the recent exemption. Sir, to me this is illogical and the benefit of the exemption should be granted irrespective of any gift made within five years of the date of death. If the Hon. Senior Minister of State does not think that my argument is illogical I hope he will take the necessary steps to put the matter right.

I also wish to add that when assessment of an estate takes place, the Department concerned should be fair and reasonable in the assessment. I know of one case where the grown-up children bought a detached house in the name of their mother and they have been paying the instalments. Many years later, she died intestate and the house had to be sold to pay for the estate duty, leaving behind a paltry sum of money hardly enough to buy a terrace house. This happened in the early 70's when there was a boom in property prices.

I would like to urge the Hon. Senior Minister of State to consider my suggestions.

Sir, touching on consumer prices, (Part VIII, on page 42 of the Economic Survey of Singapore 1978) pork price, amongst other food items, registered a 3% rise despite a drop of 5% in pig prices received by farmers. Therefore, it would be pertinent to ask why the benefit could not be passed on to the consumer who had to pay for a 3% rise in pork price whereas the pig farmer got a 5% drop in pig price.

Sir, I do not know whether it is in order to ask of the Hon. Senior Minister of State if he will elaborate further on his Addendum to the President's Address that it was Government's intention to sell off pans of its investments to the public. Let me hasten to add that I have no personal interest in this matter. Is it still too early to be disclosed, or is the Ministry still working out the details? Also, if he will elaborate on the utilisation of Payroll Tax which forms part of Direct Taxes for the Revenue; $75 million to be exact.

Another small point, I think this is more a typographical error than anything else. It can be found on page 11 of Paper Cmd. 4 of 1979 under the heading "Statement of Loans Repayable to Government (Partly Estimated)", Housing and Development Board, item no. 35, "6% Loan for Law Cost Housing, 1971/72 - Short Term." I think it should be "Low Cost" and not "Law Cost". No doubt this is a mere typographical error. There is a great deal of difference between "law cost" and "low cost". I hope a correction to this end will be done.

Mr Speaker: What do you mean by "law cost", Mr Ng?

Mr Ng Kah Ting: Cost pertaining to law. In my debate on the 5th of March on the First Supplementary Estimates, legal fees can also be "law cost". So "low cost" is different. "Low cost" means that the cost is low.

Sir, with that, I come to the conclusion of my observations on the Budget Statement. However, there is one small point that bugs me. That is, I notice that foreigners are allowed to open supermarkets and departmental stores. Such enterprises would definitely have undue advantage over our local ones, namely, our NTUC and PIEU/SILO supermarkets which have to purchase in bulk and sell at a low profit margin to the consumer whereas these foreign enterprises may be able to obtain more favourable credit terms on consumer goods from their own countries. I must say that I am not prompted by the NTUC, SILO or PIEU to raise this matter. It is the result of one little observation that I made because I was astonished when I once popped into one supermarket and departmental store and was told that some of the items sold there were slightly more expensive than those sold in our NTUC or PIEU/SILO supermarkets, and yet large crowds of people throng there. I cannot understand this.

I do not think the Government should allow such enterprises to function here. I understand that many of our retail shops have been badly affected and have, in fact, closed down. So this is not a benefit to us, and I can only hope that the Hon. Minister will do something about it. In short, I would like to suggest that the retail trade be done by ourselves only and not foreigners.

Sir, on that note, I support the Motion in the name of the Hon. Senior Minister of State for Finance. 5.50 p.m.

Mr Ho Kah Leong (Jurong): ( In Mandarin): Mr Speaker, Sir, on the 5th of this month the Senior Minister of State for Finance presented on behalf of the Minister for Finance, the new Budget in this House. Contrary to the usual practice of the past years, he did not introduce any new tax or increase existing ones. On the other hand, he announced five tax concessions. This is the Minister's introductory present to this House. The Budget has also left a good first impression to the general taxpayers. However, to the masses of citizenry, when there is no new tax or tax-increase, it means that the burden of livelihood will not be increased for the time being at least. Therefore, there is no reason not to welcome this Budget. Of course, the main reason for the new Budget to be painless is that our economy, with the joint effort of all the people, has enjoyed good progress - an 8.6% economic growth in the past year. As regards our economic structure, the Government has also succeeded in its diversification programme.

Personal and company incomes have also increased as a result. Therefore, the simple message of the Government to work hard for a better living, ought to be better understood by our people.

The new Budget reflects clearly our solid economic position, and together with political stability, they constitute the most favourable factors in attracting foreign investments to this region. The success of attracting new investments will, of course, strengthen our economic growth. But the Government should also at the same time pay attention to the increasingly serious problem of shortage of labour and to provide early solution.

On the other hand, the Government's continual emphasis is on development expenditure while at the same time economising on recurrent expenditure. Of course, this is aimed to stimulate economic growth in the coming years. But, the much publicised and long awaited mass rapid transit system should be approved early by the Government, so that the activities in the construction of the system and its concomitant commercial activities will no doubt generate further economic growth.

To my mind, the new Budget has the characteristics which stimulate the healthy growth of our commerce and industry, as well as lightening the burden of the upper middle income group. As for the middle and lower income group, I see that they actually do not benefit much.

The more important point is this, judging from the generality of the Budget, the Government does not seem to accord any importance in the encouragement of the development of a national culture. Many people lament the fact that the economic prosperity of Singapore has made our people golden-calf worshippers, gradually degenerating them into soulless economic animals. To correct this undesirable tendency, it is necessary to fall back on the virtues of our cultural ballast and education. The Government should encourage our people to engage in all aspects of cultural activities.

In this House last year, I advocated that the Ministry of Finance should grant tax relief benefits for any company or individual who bought any article of artistic value, so as to give the much needed impetus for our artistic creativity. I hope the Minister concerned will give a favourable response to my suggestion.

The Senior Minister of State, in announcing tax exemption on pension income, has been both humane and reasonable. He said, "We have to be a hard-headed Government but we are not hard-hearted. Wherever we can afford to, we shall show in some tangible way that those who have served are not forgotten". This heart-touching and humane statement has so touched me that I feel it necessary to speak once again on behalf of those retired teachers of the aided schools. These retired teachers have worked conscientiously for education and have dedicated their lives to our country. Because the CPF contribution was low during the time of their service, the amount they got upon their retirement was very meagre. If they were to buy a flat with their CPF savings, there would not be very much left.

No sooner had they retired than they had to return their medical benefit entitlement cards. Society seems to be rather unfair to them. When one grows old, of course, one tends to get ill more easily. Therefore, now is the time when they need medical care most. While they have to look for jobs to make a. living and not always with medical benefits, on the other hand, they still have to save up something for medical care.

I earnestly hope that the Minister concerned will do his utmost to assist these aged retired teachers, in the same spirit and by the same reason as he accords tax exemption to resident pensioners. 5.57 p.m.

Dr Augustine H.H. Tan: Mr Speaker, Sir, in his first Budget statement, the Senior Minister of State for Finance said that, "All in all, 1978 was a satisfactory year for us." This understatement of our economic performance sets the tone for the cautious and balanced presentation of the Budget. In my view, Sir, we have done rather well indeed. The GNP growth rate of 8.6% was the highest for the region and was more than twice the growth of the OECD countries. This performance was all the more satisfying because our rate of inflation was among the lowest for the world. It would be well for us to consider the policies that made this economic performance possible.

By conscious choice we have built a well-diversified economy. This diversification has provided us with the necessary resilience so that, in the last world economic recession, we managed to have positive growth rates while most other countries went under with negative GNP growth. Members will recall that in 1974 our GNP growth rate was 6.3% while in 1975 it was 3.9%. The diversified nature of our economy has enabled us to enjoy satisfactory overall growth rates even when specific sectors falter. In 1977, for example, the manufacturing sector was over-shadowed by the performance of transportation, communication and trade. Last year, transportation and communication was again the leading sector, although manufacturing had recovered somewhat to be a close second. Of course, diversification has its cost. Economies which are less diversified or are more specialised like Hong Kong enjoyed higher growth rates last year. However, such countries suffered more than ours during the 1974-75 recession. As we face an increasingly uncertain and difficult world economy, our diversified economy has more to commend it.

Sir, hon. Members may also note from the Economic Survey that South Korea enjoyed a 12 1/2% GNP growth last year but she suffered an inflation rate of 16.4%. Our consumer prices rose by only 4.8%. In other words, higher economic growth could have been achieved only at the expense of price stability. It may seem like rationalisation but, in my view, it is undesirable to attempt double-digit growth rates not only because of the inevitable inflation but also because unduly high growth produces severe distortions in the economy. We faced such a situation in the early 70's when cost of land and construction mushroomed so rapidly that the property market became severely distorted. It became impossible for many people who did not qualify for HDB flats to own their own homes. Hence Government had to build executive flats and start HUDC. Furthermore we may note that it is not really possible to gain experience or imbibe new skills too rapidly. 6.00 p.m.

[Mr Deputy Speaker in the Chair]

Dr Augustine H.H. Tan: However, Sir, given the unfavourable world economic situation, we need not worry about the undesirable consequences of too rapid a growth. We do need to remind ourselves nevertheless that steady growth is achievable only by a necessary combination of factors. Government fiscal policy must be prudent. Out of a total estimated expenditure for the financial year 1979, 43% is for development. This is a healthy percentage. Moreover, unlike many other countries, our development projects are carefully screened to ensure that they are able to pay for themselves in the future with the exception of the social-infrastructure type of investment.

A point of criticism is nevertheless warranted here. Last year Government current expenditure rose by 22%. In particular, purchase of goods and services rose by 16%, the bulk of which, according to the Economic Survey, was "for current operational requirements such as stationery and office supplies, public utilities and maintenance of lands and buildings." I would seriously urge our civil servants to be more restrained in such expenditure in the future. In the private sector, business image and sales promotion require glossy prints and pamphlets and expensive stationery. Government departments have no real need for such frills. What the public wants is prompt and courteous service, not glossy reports extolling the achievements of the various departments.

Another point which Members may wish to note is that the total expenditure of the seven largest statutory boards amounted to $3 billion or 76% of Government's expenditure of $4 billion. Yet Parliament does not scrutinise the details of the statutory boards' expenditure. The budget which is being presented to us in Parliament constitutes only 57% of the expenditure by the entire public sector. It is about time that Parliament made up for the serious neglect.

To return to my discussion of the factors that have made possible our steady growth with minimum inflation, three other national policies deserve attention. One is monetary policy. Sir, we have followed a moderate course in expanding money supply to meet the liquidity requirement of growth without triggering inflation. This is a delicate task in view of the openness and smallness of our economy. It is a fine tribute to the health of our economy and the confidence we have generated that we were able, last June, to remove all exchange controls. By doing so, we have added to our attractiveness as a haven for investment. However, the price we pay is two-fold. One is the loss of some degree of freedom to set our own interest rates which are at variance with those of other financial centres. The other is the increased need for vigilance to avoid financial tidal waves from swamping or denuding us. Here, I would urge that special attention be paid to the Asian Dollar Market to ensure that it is not overly extended and that the integrity of the domestic banking system will not be compromised in any way. We have rejoiced over the phenomenal growth of the Asian Dollar Market from year to year, but we should be mindful that financial crises worse than those experienced during the last recession can be expected in the future.

Our exchange rate policy has been, by and large, correct. The problem is usually to adjust to external changes, for example, the decline of the US dollar, the devaluation of the Indonesian rupiah, and so on. We should be aware that the exchange rates are crucially affected by domestic fiscal monetary and wage policies. Profligacy in fiscal matters, over-expansion in money supply, and unduly large wage increases lead inevitably to devaluation. Hence, countries which pursue such policies are forced to devalue. We need not follow such devaluations, because we have a conservative fiscal policy, and our monetary and wage policies are moderate. If we choose deliberately to under-value our currency, our foreign exchange reserves would accumulate unduly fast, causing an over-expansion of money supply. This would in turn cause inflation, leading to a devaluation. It is then back to square one. The temporary export advantage is eroded subsequently by inflation and devaluation.

Wage factor is another important factor in our economy. The National Wages Council has emphasised moderation and the need to match wage increases with productivity increases. This is imperative for us if we are to survive and prosper, as we face an increasingly hostile world economic environment. Members are aware of the increasing protectionism in the industrial countries, not only for manufactured goods but also for services. And the new Member for Anson has reminded us with new examples of protectionism in the shipping industry. We welcome all multilateral efforts to reduce trade barriers, but we should not be too hopeful of the outcome. Domestic unemployment and inflation in industrial countries are making them inward-looking. Every one of the 98 countries involved in the GATT-sponsored Tokyo round of talks at Geneva has a long list of industries and projects that it wants exempted from the impact of the proposed tariff cuts. The lesson for us is clear. Hard work, discipline, hard- headed policies and thrift are vital for our survival in the years ahead.

Sir, I am glad that the Singapore public has been alerted to the energy crisis, at long last. After the initial scare of the oil embargo in 1973 and the subsequent dramatic increases in the price of petroleum, we seem to have become profligate again about using energy. The Iranian situation is a harbinger of things to come. Unless there is a dramatic breakthrough on the energy front within five years, the world economy is headed for turbulent times. We would be well-advised to adopt strict conservation measures and to accelerate the diversification of our energy base from its almost total dependence upon oil.

Sir, I give my support to the financial policies of the Government as expressed in the Budget. 6.08 p.m.

Haji Sha'ari bin Tadin (Bedok): Mr Deputy Speaker, Sir, I would like to join my colleagues in expressing our thanks to the Senior Minister of State for Finance for delivering the Budget statement on behalf of the Minister for Finance.

Whilst the financial statement on the budget for FY 1979-80 has brought joy all round, the Senior Minister of State for Finance must be congratulated and given full credit for his first budget, which he was fully responsible for the preparation and presentation in what he described as "completely painless and even mildly pleasurable".

The budget contains a bagful of surprises in the form of tax concessions for the middle income earners, pensioners, and those who own homes. Sir, I do not propose to discuss the tax concessions as my colleagues have already touched on them in great detail. However, Sir, I was a little disappointed when no mention was made of the position of personal and earned income reliefs which have not been revised since 1948. I am even more disappointed because the Senior Minister of State himself was one of those who strongly advocated further increase in the earned income relief when he was a Backbencher. This subject has been raised by other colleagues in this House year after year but to no avail, as the Hon. Minister for Finance remains adamant about it. Sir, if I am allowed to quote what the Senior Minister of State for Finance said when he took up the issue as a Backbencher in the budget in 1976. I quote from Hansard, Vol. 36, col. 835:

'Let me ask, Sir, have we built a case for personal reliefs to be increased by, say, $1,000? I submit we have if the quantum of personal reliefs as originally allowed in 1948 is intended to apply in real terms to today's living environment. Some countries like Canada have introduced indexation to income tax reliefs to ensure that these reliefs remain meaningful when cost of living goes up. I suggest the Ministry of Finance study this possibility.

Let me briefly buttress our argument for a tax rebate - for that is what it is if personal reliefs are increased - with economic arguments. The Government has vowed to make the economy grow fast again, at least 6 - 8% in real terms. The Government has also emphasized the desirability of keeping costs down, including wages. First, if personal reliefs are increased by $1,000, the tax loss to Government is $26 million. By the same token, the money pumped into the economy is $26 million, assuming this entire amount is spent by the recipients. This should help to stimulate the economy. With economic growth, the tax collections should increase and hence the ultimate tax loss to Government will be less than $26 million. The tax rebate of $26 million will not be inflationary as we are an open economy. It is instead expansionary.

Second, to the individuals it is real disposable income that matters, not salary, not even take-home pay. If the real disposal income is inadequate to sustain a minimum expected level of living, there will be pressure by employees to have their wages increased. Tax is an important element of cost. So long as the Government can afford it, it is better to have as low a tax rate as possible so that the overall wage required by an employee will not be artificially pushed up. It is better to give a tax rebate, assuming Government can afford it, and have a lower NWC annual increase for the taxpayers who benefit from such a rebate, than to give a higher NWC annual increase in order to achieve the same real disposable income. The end result is lower labour costs with the same real purchasing power after tax.

This leads us to the final tantalizing question. Can the Government afford to give away $26 million? I shall leave it to the Minister for Finance to answer the question!'

Sir, the Minister for Finance in his reply, of course, said, inter alia,

'.... I would be very reluctant to give any special consideration. I do not know whether this has been the accepted practice in many other jurisdictions, and I am loathe to be the first to start in Southeast Asia, if not, in Asia. There was the question whether I could spare $26 million. The answer is, I can spare it if I can find it ....'.

Sir, what I would like to learn from the Senior Minister of State for Finance is whether, in the course of preparing the budget, the subject of personal and earned income reliefs has crossed his mind. Has he really forgotten about it? Because nowhere in the budget was any mention made about the subject. I sincerely hope that since he is fully responsible for the budget, he should consider increasing the personal relief to $2,000, as he originally proposed, in his next budget.

The world economy progresses at the rate of 3.6% per annum. In spite of the slow growth rate of the world economy and increasing unemployment in industrial countries, Singapore was able to keep the rate of unemployment down to 3.6%. Sir, what concerns me most is the gloomy outlook as reflected in the Senior Minister of State's statement on the state of oil, which might lead to another major crisis if the present political turmoil in Iran continues unabated and Singapore will have to turn to some other countries for her oil supply. The Member for Kolam Ayer has also warned us of the dangers of the shortage in world oil supply and the measures to be taken to conserve the use of energy.

Sir, while our economic forecast does not appear to be bright, there is still hope if we continue to develop at a fast pace and work even harder to ensure reasonable growth in the years to come.

From his concluding remarks on economic policy, the Senior Minister of State predicted that, in spite of the sluggish world economy, he was confident that our economy would continue to do well so long as the people were prepared to put in their best efforts.

On the Budget policy, the Minister of State has given us tax concessions instead of introducing new taxes which would incur additional financial burden. Most Members, if not all, who have spoken before me, have touched on these concessions in greater detail and I do not propose to repeat more or less the same views already expressed.

Apart from the points that I have brought up, I feel that this year's budget and financial policy have brought forth happiness to many, and let us hope that Singapore will continue to perform better in the economic activities, thereby bringing prosperity to the people.

On that note, I support the Motion in the name of the Senior Minister of State for Finance. 6.17 p.m.

The Senior Parliamentary Secretary to the Minister for Labour (Mr Fong Sip Chee): Mr Deputy Speaker, Sir, it is really encouraging to see you in the Chair. I promise I shall behave as well as if Mr Speaker is in the chair.

Sir, I am afraid that this year's budget debate has to be an anti-climax in this House, as all the important issues have been efficiently, competently and adequately expounded over the TV forum. I wish to remind hon. Members that if they intend to propose any cuts in the vote for the Ministry of Culture on mass media, they will have to bear in mind the power of the mass media. It therefore leaves us, Members of this House today, to discuss only the more mundane issues and not high finance or economic theories. Of course, several Members have indeed impressed this House very much, not only with their delivery but also for the meat of their speeches. I am afraid therefore that I would have to join in this anti-climax.

Although all the important issues have been disposed of by the effective replies and arguments put forth by the Senior Minister of State at the TV forum, all is not lost, however, because none of us have touched on the manpower expenditure. There are several points I wish to raise here which ought to be raised in the Committee of Supply but, because they occur so frequently, I feel that I might as well raise them now in the general debate.

What I intend to discuss today is what I would call "justification of Government administrative blunders." If we were to look at the budget for manpower, $603 million will be spent on salaries and wages alone. With the frequent lapses in the lack of humanity in the various Ministries, it is timely for me today to strike a little chord of warning so that we will not lapse into the same behavioral patterns as in the colonial days. There are many mistakes - I would say they are quite genuine mistakes, if I may use the term very loosely, but, a mistake is a mistake. The Government has been brave enough to admit them, although not all, Sir.

For example, several years ago, the Member for Punggol raised in this House the question of tax relief for aged parents. He was a very gallant man, Sir, to raise this question and taking on the then Minister for Finance. And true to his colours, the Minister stood in this House and replied to the hon. Member saying (Vol. 29 col. 85) that filial piety is a virtue in Asian society and so why should one be so mercenary as to ask for tax relief for parents? I thought it was a good argument. Fair enough. Bearing in mind my own training and my own cultural background, I thought that was a very good reply. However, the present Minister for Finance - I do not know whether it was out of his good heart, but I always believe he has one - agreed to grant a tax relief of $300 for the maintenance of parents. In other words, filial piety can be quantified - $300! The Minister's generosity did not stop there. A year later he increased it to $750.

Now, we are not complaining about this, but it just goes to show that, where filial piety still remains a virtue in our society, we have, within a short period of a few years, two different approaches to the same problem. One said it was mercenary. The other said that the father was worth $750. If you employ a gardener, you have got to pay more, Sir.

Then there is the question of tax relief for the wife and children. I have just asked my colleague, the Senior Parliamentary Secretary to the Minister of Defence (the Minister for Home Affairs would not tell me), how much the Ministry spends a year for the upkeep and maintenance of the Provost Dog Unit. He said, "It is a very expensive affair. It requires two NCOs to handle the dogs, and the dog food will probably cost about $3 a day for each dog." May I at this stage - before I allow myself to make further mistakes - say that I have no intention at all to compare our wives and children with dogs! But unfortunately, it is a good example to show how much we are worth, if we could only find out the amount of money spent on the two Dog Units. Of course, in the Police Force there are different grades or streaming - the more intelligent dogs would be the Narco dogs, the less intelligent ones would be the guard dogs. So how much money is spent on maintaining one dog per year? And we are expected to maintain our wives at $1,000 a year, $750 per child up to a maximum of two children. This scale has been there for years. No adjustment has been made so far. Ten or 15 years ago, I would imagine that an allowance of $500 as relief for maintenance of a child was more than enough. But in 15 years everything has changed. The consumer price index has gone up. The cost of living has gone up. Our children are still worth $500 each, and with a little generosity, a bargaining off, it has been increased to $750 per child only if we have two children. I do not know how they justify that. Is it a mistake? Is it a blunder?

And here also we have a very good animal lover in the Member for Mountbatten who prompted the Minister to consider training the animals, apes, monkeys, and so on. I believe our Ministers, particularly the Minister for Finance, are all canine lovers. Better treatment is being given to dogs than wives and children! If they do increase any tax, they collect it immediately. They announce it on 31st December and the next day the tax goes up. But if they give us a concession, we will get it next year. Of course, we are jubilant over the concession for CPF contributions. But some trade unionist Members raised this question: "Why not change the personal relief scale, instead of giving a concession for CPF contributions?" The answer was, "No, no. We want to have a wider tax base." When they give concessions, they do not want to have a wider base. How do they justify this?

I am also reminded, Sir, of the statements made during the by-elections by the Minister of Defence-designate then. I have to be extremely kind to him, Sir. Since he promoted me to a Major in the Army, probably because he had heard of my reputation when he came in. I have to restrain my comments, but I do wish to quote him. The Minister-designate said during the election campaign, that the former Member for Potong Pasir - Mr Ivan Baptist - I can call him by his name now, Sir - fought the bureaucracy while he (Mr Baptist) was an M.P. What the Minister of Defence forgot to mention was that Mr Ivan Baptist fought bureaucracy, and lost! Now he has taken over Potong Pasir! He added, "I can fight bureaucracy better because I know how it works." And he was the former Head of the bureaucracy! If bureaucracy is something that needs to be fought, it must be something evil. Therefore, this is the main theme of my discussion today, "justification of administrative blunders."

I do not wish to go into ideological or philosophical arguments. Let me get down to a few real life examples. There was an acquisition exercise somewhere in Tampines, and to their horror they found that the piece of land which was supposed to be acquired - it was gazetted for acquisition - had already been developed into a beautiful estate! If I am not wrong, it is Tampines Garden.

The Senior Parliamentary Secretary to the Minister of Defence (Mr Phua Bah Lee): Tampines Wood Estate.

Mr Fong Sip Chee: Tampines Wood Estate. Thank you very much. They had to evict the residents! The residents said, "Look. Allow us to stay on. We will upkeep the garden for you." They said, "No dice. You get out." So they moved out. Grass grew and window panes were broken. So they offered these houses to the airlines. There were no takers. In the end, they had to get the former tenants back - those tenants who were living in their own houses and had to pay rent. What I was told was that those houses were not meant to be acquired but because of an administrative goof it was not plotted on the General Improvement Plan (GIP). You see, once a piece of land is developed, the houses will be plotted on the plan. In this case the plan for acquisition showed "lallang land" and therefore it was a very cheap piece of land, so it was red pencilled and marked out for acquisition. Later, they found that there were houses there, and they could not de-gazette it because this would create a precedent and would apply to other places. How could they gazette this? What happened? How do they justify this blunder? I do not know, This is one example.

Then there was an example of a woman who lost her citizenship - in five minutes - and got it back after three rather naughty letters from me. I am not claiming any credit, but I just want to show an example of the Government machinery which operates with total ignorance of the real life situation of Singapore, our people, our culture. This woman met me and said that she lost her citizenship. I asked her how did she lose it. She said, "i don't know. I was told to go to the Identity Card Office with two photographs. They withdrew my pink identity card and gave me a blue identity card." I wrote to this Office. They replied that the date of birth on her old identity card did not tally with that in the Birth Certificate and she could not therefore prove that it was her Birth Certificate. Subsequent letters of appeal were written and I got the same reply. I sensed that this woman was wronged and so, in one of my meet-the-people sessions, I asked my staff to borrow a Chinese almanac from next door. On going through the almanac, I discovered that the date of birth on her old identity card was exactly the same as that shown in the Birth Certificate but it was based on the Chinese calendar. This is an old practice! So I wrote to the National Registration Office and Citizenship Registry and she got her citizenship back. My next question is: How many more such cases are there? The point is when we deal with our people, we must understand their cultural background. There should be a checklist so that even a non-Chinese officer who comes across such a case would be able to go through the checklist first before revoking the citizenship. I asked, "How many more such cases are there?" The officer replied, "We don't know, Mr Fong. I really don't know myself." This is one goof. How does one justify this?

Then there is the Registry of Companies. The Management Services Department moved into the Registry of Companies and recommended that to save costs, the Registry should do away with the telephone operator and that each officer should have a direct line. So if you want to ring the Registry of Companies to speak to an officer on a certain subject, you will just have to ring any of these lines. But the very senior and highly paid "telephone operator" at the other end would say, "Sorry, this matter does not concern me. It is the other officer. Please ring this number. I cannot transfer the call because this is a direct line." For every six telephone calls I make, according to the law of averages there will be five wrong numbers! All this just to save the cost of a telephone operator? Justification of a blunder? They say it is efficiency!

I remember when I was the Member for Stamford and before my "resettlement", I made a proposal to erect an overhead bridge at the High Street junction, so that traffic could proceed ahead. The only function of the traffic light there was to stop the traffic just to allow the pedestrians to cross the road. I received a reply saying that it could not be done because the site there was encumbered with underground services and they had no money. A few months later I saw construction work going on there. I rang the PWD and asked what was being done in my constituency. They said, "Oh, we are going to construct an overhead bridge." On hearing this, I vigorously opposed the idea. After about ten minutes of discussion, the officer said, "Well, if I am not mistaken, Mr Fong, it was your proposal that we are now talking about!" I said, "But then you told me the site was encumbered with underground services." He said, "Oh, we have now found out that it was not so." then while they were building the bridge, they issued a statement saying that the PWD was building it, I have nothing against them, Sir. They were doing good work. It is a natural tendency of the so-called experts and professionals that every time a layman, and an MP in particular, proposes an idea, they will not implement it even if they agree to it, because if a layman can provide a solution when the experts cannot, they should not be there any more. This is a typical example of cutting you down first because "we will do it ourselves.."

This also happened in my proposal for the provision of canteen space in multi-storey buildings. I raised the question with the Ministry of the Environment at a meeting chaired by my colleague, the Senior Parliamentary Secretary to the Minister for the Environment, with the URA representative. Their impression was this: "We build a multi-storey building. To put a canteen inside is un-becoming of a good architect?" The answer was no. It took them three months to reply to the Ministry of the Environment who conveyed their decision to me that it could not be done. A multi-storey building should not provide this kind of service because they expected the clerks and the sales girls to eat at the restaurant in that building? They would probably eat up their salary in three days! But, four months later it was declared as a matter of policy that multi-storey buildings should have canteen space for the staff! So they will slaughter you first, have the idea re-hashed, or re-born, so that it will be one up for that ministry. i am not challenging them for doing good work. Neither do I envy them. What I wish to inform Members is their attitude towards suggestions from Members of Parliament.

Here is another very interesting case. We know that it is very difficult to get money from the Government. Sir, I claim the credit of getting one dollar from the Government. I was to be blamed, Sir, for delaying payment of my road tax. When I decided to pay, the tax went up! Rather unhappily, I went there to pay my road tax. The officer said, "Well, you have to pay so much now." Reluctantly, I paid. Six months later I received a letter. The only politeness in that letter was the word "please". It was a cyclostyled letter. That means there were many similar cases. The subject matter read: "Re: your car number .... short payment, $2. Please see the undersigned on receipt of this letter with your registration book ....", and so on. They made a mistake, and I received a cyclostyled letter saying, "Come and see me with your book" So I wrote in, not on Parliament letterhead for fear of being accused of browbeating the civil servants. (The Minister for the Environment here had accused me of trying to be a hero. I will come to that point later.) I inquired from them as to how I had short paid $2. They replied that the tax should be this amount and not that amount and so I had short paid $2. I wrote again saying, "When I approached the officer, I paid the amount as demanded. Therefore, there was no question of a short payment." They replied that there was a change in the tax rate and the officer in charge had miscalculated it, resulting in an under-collection of $2. I contended that "under-collection" is quite different from "short payment". In the case of a short payment the liability was mine. I asked them under which provision of the law that a member of the public has to pay to rectify a mistake of the Government. A reply came promptly, "Please be magnanimous. Pay the $2." We have to pay for our magnanimity! I wrote back saying, "In the spirit of magnanimity I will pay, but only on condition that you promise by return of post that you are prepared to pay for my transport cost to get down to your office, my time taken to attend to this matter and the cost of one registered letter." A reply came back again, "Please pay in order to be magnanimous." Finally, I told them that in the spirit of magnanimity, I would waive all charges except $3 as a token fine for their mistake. As a result, after the deduction of $2 which I owed them, they now owe me $11. I received a reply enclosing a receipt for $2 and $1 cash. That $1 is still in my file. I shall have to frame it up. (i did not indulge in illegal activity on receipt of the $1, Sir. I was tempted to do so, but as a good Member of Parliament, I did not.) I managed to get $1 out of a Government department. But I lost $19 in the end. I wrote them a letter, this time on my letter-head, saying that I did not do so in the past for the reason which I have stated earlier. Now that commonsense finally prevailed, there was cause for celebration. I did so in the form of a donation of $20 to the ROV Officers' Sports Club. $19 was my own donation and the $1 from the Government department for their penance. It was yet another justification for a mistake! They make a mistake, you pay for it, being a good citizen.

I can go on, Sir, giving many other examples. But I am afraid you will rule me out of order. We have to confine ourselves to discussion of the general principles of the Budget Statement. The examples which I have quoted do illustrate that at times there are lapses in the Civil Service in implementing Government policies. We spend $603 million on manpower and salaries alone this year.

I must state here, and I think the Minister for National Development would be pleased to hear it, that I do enjoy extremely good cooperation from the Resettlement Department. These officers were or are - I hope they still are - quite enlightened. But at times they can only be enlightened after I have enlightened them. There was a case of resettlement. A farmer was offered an alternative piece of land. There were two brothers and two pieces of land were offered. The elder brother moved in first. After some months the younger brother bought all the timber, planning to move in on to the new piece of land. But the elder brother said, "Don't, this land is again being acquired." So the younger brother did not move in, but in the end he lost all his claims for the original compensation on the grounds that he had failed to take occupation of the land offered. But the land offered was once again acquired. The matter lasted for six years until I went to the constituency. I charged the Resettlement Department for expropriation and then they agreed in the end to pay what they call "ex gratia payment". They cannot call it "compensation" because that would mean admitting their mistake. They had to justify their mistake by calling the payment "ex gratia payment". That is one example.

Another example is that frequently we find that in resettlement cases a family will approach the Resettlement Department saying, "Can I have two units because my son is now married?" The standard reply reads, "When we did the census, there was only one family unit. We cannot now give you another unit." I took the matter up with the Resettlement Department and asked them to produce the law which says that once a family has been censured for resettlement, no member of the family can contract a marriage. I do know, Sir, that in my old constituency some places had been censured for resettlement but no clearance for ten years. We do not expect a young maiden to wait 10 years to get married! Does it mean that if a person gets married, he or she is not entitled to a house? Sir, on that argument the Resettlement Department relented and agreed to offer an additional unit, albeit on a rental basis. At least the family has a place to stay. There were several similar cases. On the same argument each of them obtained an additional unit.

Fortunately or unfortunately, their brains did not stop working, as far as the resettlement officers are concerned. To my amusement, one day I received a letter from the Department in reply to a similar case of a request for an additional unit. It stated, "We regret to inform you that we are not able to offer you an additional unit on the grounds that your marriage was not consummated." Sir, for 17 years as a Member of Parliament, I have never come across such logic or argument, I replied to the Department and, among other things, I stated, "Since civilization began, a matter such as the consummation of a marriage is not normally done in the presence of a witness." The Housing Board took on the role of the High Court. They almost nullified the marriage. Only the High Court can decide whether or not a marriage is consummated and only upon a complaint by either of the parties. In this particular case, although there was no complaint, they ruled that the marriage was not consummated! See how do they justify a blunder? The reply to my two-page letter was indeed very short. "Please refer to your letter dated so-and-so. I am pleased to inform you that the couple has now been offered an additional unit."

As I have said, I can go on giving examples. My intention here is to bring to the attention of the Ministry of Finance, the MSD, and particularly those people who implement policies, of the need to be flexible, humane, and to bear in mind the kind of people they are dealing with. Strict adherence to the rules is good. But they should allow some flexibility. Rules are made to guide the civil servants to work more efficiently and expeditiously. The Instruction Manual runs into three volumes. But they are based on past experiences to help the officers to discharge their duties in the most efficient, expeditious and humane way. But unfortunately, some of them allow themselves to be tied up in knots by the same Instruction Manual which is designed to help them. The examples which I have quoted are not that serious, but if we do not check all these minor lapses here and there, many citizens will be wronged. In the example of the identity card case which I quoted earlier, if that citizen were to approach a Member of Parliament who is not conversant with Chinese culture, she would have been wronged for the rest of her life. For one citizen to be wronged, that is bad enough, Sir. There is no recourse to litigation because if she were to go to court she could not prove that it was her certificate until a little detective work on culture was done by an MP. These lapses should remind us that there should be some check lists in the various Ministries. If they are confronted with a situation there should be a check list with which they can go through the various points before taking the rather unpleasant action, say, revoking the citizenship of a person. It is a serious matter, Sir. Regarding my query on how many more such cases, there was no answer. Since we spend $603 million on manpower and salaries, should there not be a special unit set up, perhaps under the MSD, to look into lapses like those I have just mentioned? The unit can propose some guidelines as to the degree of flexibility that can be allowed under certain circumstances.

It is an unpleasant thing to have to resettle people but they generally accept that resettlement is for the benefit of the State. The principle should be that whilst no one should benefit from resettlement, neither should the people suffer as a result of it.

It is therefore important that this special unit be set up as quickly as possible because as we increase the tempo of development, the officers tend to be more and more indifferent and they follow the book more and more. "After all, I draw a day's pay. I follow the guide book. If certain things cannot be done, they can see their Member of Parliament." A Member of Parliament can only offer to his people his sincerity, his willingness to work hard for his people, but he cannot offer all the solutions, still less provide answers for administrative stupidity. I do not think that is the role of the Member of Parliament. Fortunately, our meet-the-people session is a good bridge between the people and the Government. From our experience, we can gauge the general feelings of the population. But I do not think that is enough, Sir. What should be done is that the various departments should have their own guidelines on certain cases, particularly citizenship. It is a serious matter, and yet these guidelines are absent. They are merely following rules. And if the Minister for Finance can allow a provision in the MSD - first of all, the MSD themselves must be enlightened - and if all the Ministries were to suffer the same fate as the Registry of Companies where all the officers have direct lines, then we have to find another MSD to advise the MSD. It is important, Sir, that these lapses here and there should be checked. And it is all these grievances that sway the general mood of the people.

On that note and with the hope in mind that the Senior Minister of State will respond to this suggestion to check the various lapses in the Ministry, I rather reluctantly associate myself in supporting the financial statement. It is painless and a rather mild surprise, because the pain will come afterwards. 6.49 p.m.

Mr Tan Soo Khoon (Alexandra): Mr Deputy Speaker, Sir, last December the world was shocked when the 13-nation OPEC cartel announced a general increase of 14.5% in the price of oil for 1979. OPEC tried to cushion the shock by spreading the increases over four stages throughout the year. Then events moved fast. A political crisis in Iran erupted. In a few short months of incessant political turmoil, export of oil from Iran plunged from 5.5 million barrels a day to nothing. Even if the Iranians should now resume exports, the future is bleak. Iranian oil will cost an incredible US$20 per barrel. But what is made worse is that other countries will now follow Iran's example, and there is a possibility of OPEC announcing another increase beyond the 14.5% it has already set for this year. It is not an un-imaginable situation as oil is always in short supply and many developed countries which need oil badly are prepared to pay any price for oil. The so-called "spot market" has also contributed to the spiralling price of oil. With spot prices reaching dazzling heights of US$30 per barrel as a result of speculation by middlemen, the temptation is there for OPEC countries to join the rampage. The sky appears to be the limit for the price of oil. This will have serious effects on the world economy.

Inflation is bound to take its toll on developed as well as developing countries. More US dollars will flow into oil producing countries adding to the vast billions already accumulated by these countries since the last oil crisis. This means a further weakening of the value of the US dollar against other major currencies and will in turn undermine the international monetary system.

Very evidently the world is in a critical stage. It is on the brink of falling headlong into its second economic crisis in five years. The important thing to us is what we as Singaporeans, subject to the effects of events happening elsewhere and which are beyond our control, can do to brace ourselves for what the Senior Minister of State for Finance has said would be an "uncertain and wintry economic climate."

We have to take positive steps to reduce our consumption of energy. A few days ago when the Senior Minister of State for Finance performed on television, he warned of the possibility of higher prices for energy because of the oil shortage and price hike. No rightminded Singaporean will chide him for that. On the contrary, we should be grateful for his warning, and begin to take steps to conserve energy. It was perhaps unfortunate that after the first energy crisis of 1973/74 when Singaporeans were first made conscious of the need to conserve energy, no further serious efforts were made to sustain the drive to reduce consumption. For Singaporeans, the first energy crisis seemed to have gone as fast as it came as few realized that the luxury of switching on electricity at the touch of the fingertips is a luxury that has become too precious to waste. Even as OPEC was announcing their price increase last December, Orchard Road was buried in an orgy of dazzling lights as hotels competed with one another to see which had more and brighter lights during Christmas - indeed a very appalling situation if you consider the amount of precious electricity that must have been wasted during that period.

The Senior Minister of State's warning though somewhat late, is better than never. We have two options: either cut back on our consumption of energy or face the prospects of energy rationing. The latter is something we rather not have if it can be avoided, and avoid it we can by painstakingly taking every conceivable measure to save on the use of energy. I can think of a few examples, e.g. economising on the use of air-conditioning in buildings (this Chamber included), switching off the lights and air-conditioning during lunch breaks, bathing in cold water instead of heating it, cutting down on unnecessary journeys by car thereby saving on petrol, restricting the use of illuminated advertising signboards. Sir, the examples I have given may sound petty but a little bit saved here and a little bit saved there all adds up to a pretty big sum. There are indeed numerous ways we can save energy if we stretch our imagination a bit further but every individual has to play his part. The Government on its part must in no way relent on its efforts to drive home the message and if necessary take measures against those who persist in flouting the national effort towards saving energy.

Sir, I support the Motion standing in the name of the Senior Minister of State for Finance. 6.55 p.m.

Mr Tan Cheng San (Paya Lebar): ( In Mandarin): Mr Deputy Speaker, Sir, I support the Motion moved by the Senior Minister of State for Finance on 5th March, 1979.

The Budget Statement this year is very much welcomed. In view of the pessimistic economic preview of the world economy, the Government is cutting down its usual expenditure and trying to find new sources to increase revenue. On the other hand, it tries hard to ensure that our country's economy will continue to maintain a certain growth rate despite the influence of the poor state of the world economy.

The development of a diversified economy mitigates our dependence on certain industries. Thus we can reduce the danger of certain industries being heavily hit by a world economic recession. Our country is changing from one of entrepot trade to industrialisation and development as the Servicing and Financial Centre for this region. This proves that a diversified economic development is one of the important elements of our country's continued progress towards prosperity.

It is a correct move by the Government to emphasise the development of economic services and raise efficiency, especially when the world economy is facing another imminent oil price hike.

It is encouraging to note that our economic policy on industrial development is aimed at raising the workers' production value and switching on to more refined products. This policy directly raises our workers' skills: hence it will further raise our workers' standard of living so that they can have a better life.

If we want to reduce the ill effects on our economy through protectionistic measures employed by the advanced countries, it is necessary for us to develop small scale industries of high value and high techniques which economise on land, energy and are non-pollutive.

The orderly and controlled wage increases suggested by our National Wages Council has enabled our industrial products to compete vigorously and to sell well in the international markets. 6.59 p.m.

The Senior Minister of State for Finance (Mr Goh Chok Tong): Mr Deputy Speaker, Sir, had the Budget which I described as painless received nothing but pleasurable tributes, I would have been sorely disappointed: first, at the lack of mental vigour and the inquiring spirit of the MPs and, secondly, I would have considered the Budget to be somewhat of a failure, that is, if I had not received any reservation or comments on the Budget.

In presenting the Budget, the Finance Ministry and I have to take into consideration past performance, present situation and future imponderables. The Budget has therefore to be objective and to be aware of imminent difficulties in the world economy. Thus, even though the Budget is painless, it is not aimed at gaining complete popularity. It is not possible. No Finance Minister, and certainly not the Finance Minister in Singapore, is a Santa Claus distributing goodies to each and everyone in the country. What we can do is wherever possible to take a little sometimes and give a little wherever we can. Therefore the Budget, as Members have correctly expressed their reservations which I shall answer in due course, is not one that can please everybody even though it is completely harmless.

Before I come to the specific points raised by several Members of the House, I would like to dispose of the criticism that a television forum was held even before the representatives of the people had a chance to debate the Budget. I make no apologies for the forum. I regard the Budget as a document of national interest, and it is important that as many people as possible are given a chance to debate the budget as soon as the Budget statement is made. The Finance Ministry or the Finance Minister, or I myself who had a hand in the Budget statement this year, not only have to face the representatives of the people, i.e. the Members of Parliament, but also the people of Singapore. The television forum is only one additional step taken by me to explain through the mass media to the people through a panel of experts certain logic or rationale behind the Budget.

I recognise the problem, however, that the Budget could forestall discussion by Members of Parliament but I have faith in the Members of Parliament that the forum would not deprive them of issues to raise just as they have done today despite the forum. It is a question of timing. It is not possible to have the television forum after the Budget debate because the Budget statement would have undergone thorough examination after a session in this House. In fact, even among the members themselves, one member felt that the hour-long discussion was not long enough. I hope he did not mention this with tongue-in-cheek. But the fact is true that an hour-long discussion would not be sufficient to pre-empt issues that would be raised by Members of the House. So I trust Members of the House understand the logic behind the television forum. I trust that the television forum, while discussing various issues of importance to the people of Singapore, has not robbed any Member of the House of the capacity to debate, to make reservations, or to criticise the Ministry.

I would like to divide my reply into two sections, one dealing with concessions and the other on general economic matters.

On concessions, reservation was expressed by several Members of the House on the budget not taking into adequate consideration the lower income workers who did not enjoy the benefit of an increase in the exemption limit for CPF contributions, I also had to sit through some embarrassing moments listening to my own arguments when I was on the other side of the House arguing for a case for personal and earned income reliefs to be upped. I would like to explain that I was convinced by the Minister for Finance as to the logic for not increasing the personal and earned income reliefs and I hope, in the course of the next few minutes, to be able to convince them so that this issue would not be raised again and again.

If we were to increase the personal and earned income reliefs by $1,000, the loss of revenue would be $26 million, and the tax base would be narrowed by about 10% to 20%. It is not possible to give an exact figure because there will be newcomers to the tax range and we cannot accurately pinpoint how many newcomers will get into the tax bracket. Also, if we were to increase the personal relief by $1,000 everyone will benefit but not by the same absolute amount. Those in the lower income group, whom Members of Parliament feel passionately for, will benefit by $50 because their tax rate is 5%. But those in the higher income group who have a marginal tax rate of 40% would benefit by $400. The measure will therefore appear to be regressive.

On pension, I am happy to note the general support for the concession given to pensioners. There was, however, again criticism of the sin of omission on the part of the Finance Ministry, i.e. those pensioners who are not paying tax do not enjoy this particular concession, and arguments have been advanced that they are, in fact, the people who should also enjoy similar recognition from the Government for their hard work in the past. The answer to that is that if they do not pay tax, it is not possible to exempt them from paying tax. Our first step in granting some tangible recognition to those who have served is not to take away from them. At a later stage perhaps, when we can afford it, we could consider a further step, i.e. giving something to those who deserve it. This was done in 1974 when the new Singapore allowance was introduced for pensioners with a monthly pension of less than $650. They were given an ex gratia payment, having taken into account the steep rise in the cost of living following the oil crisis. I can assure Members of the House that my Ministry monitors the plight of these pensioners, and if later events prove that a similar ex gratia payment is necessary, I am sure the Government will not be hard-hearted.

On estate duty, I notice that the increase in the exemption limit was welcomed by Members of the House. But two points were made by the Member for Punggol. The first point was whether the exemption cannot be extended to more than one house. I think that point can be considered. If we were to exempt, as was intended in my Budget statement, only the first house up to the limit of $200,000 there is a possible interference with ownership pattern. Husbands and wives normally would have joint ownership of a piece of residential property. Some families are fortunate to be able to own two pieces of residential property. If we were to exempt only one house, that is the first house, from the enhanced limit, then for estate planning purposes I could envisage a shift in ownership pattern. That means that instead of a joint ownership of two houses either one would have sole ownership of a single house. I do not think that is desirable. So the point raised by the Member could be considered.

On the second point of inter vivos gift, here we run into some legal technicalities. If a house is gifted by a donor to a donee, that house is legally the property of the donee. If the donor unfortunately dies within five years of the gift and we allow the exemption limit of $200,000 to apply to that piece of property, we are allowing an exemption on a property that does not belong to him. We have also to look at the situation where it is also possible that, through some unfortunate event, the donee may die before the donor, in which case he will be able to claim exemption up to $200,000 on that piece of property. Thus we have a case where it is possible to have two persons claiming the exemption on the same piece of property. For that reason we have decided that inter vivos gift will not be exempted from the increased exemption limit of $200,000 if the donor were to die within five years of giving the gift.

On the public assistance scheme raised by the Member for Jalan Kayu, one can of course always quarrel with the meagre sum made available to recipients of such assistance. But the fact is that the rate of assistance to the unfortunate recipients was revised only in March 1976 and I believe it has been revised on the average once in three years or so. Whether or not the quantum is adequate, one can generally agree that the more you give to them the better it is for them, but one has also to balance the needs of the recipients against the general availability of such funds for running the administration and for various other purposes. Anyway, the subject of the quantum of public assistance belongs to the Ministry of Social Affairs but I thought I had to respond because ultimately they would refer to the Ministry of Finance.

On general economic matters, I can assure Members of the House that their liberal advice on how we should run the economy will be taken heed of. There was general understanding of the need for conservation or reduction of energy consumption and the adverse effects on our economy as a consequence of an oil supply disruption and an oil price hike. We will therefore, in the course of the next two months, work out a programme to ensure that Singapore consumes as little energy as is practically possible. The Public Utilities Board will be launching a campaign sometime in mid-April to teach the population and industries where and how they can conserve energy. We will monitor the effects of the campaign. We will follow up with fiscal measures, if necessary, and even quantitative measures, if necessary.

There was also strong support from several Members of the House on our programme to have a scheme for long-term research and development to assist primarily local industrialists and industries. We shall, of course, tap resources in the tertiary education for this as well.

On local industries, the Member for Jalan Kayu concluded that silence means failure. The fact that no mention or reference was made to the Small Industries Scheme should not be regarded as synonymous with failure. I will give some figures on the effectiveness of the various assistance schemes to local industrialists. For the Small Industries Finance Scheme started in October 1976, 91 local companies have been granted 110 loans amounting to $15.17 million. For the Capital Assistance Scheme which was started in 1975, 13 applications have been approved with a total loan of $44.7 million. The Product Development Assistance Scheme which was started in March 1978 had also drawn some response, but I would agree with him that the response could have been better. So far, three companies have been supported with a total grant of about $200,000 while three others are under consideration. The others who applied were not supported because some of the applications did not meet the criteria laid down by the Ministry and the Economic Development Board. Since this is a grants scheme, it is important that every application is examined carefully and thoroughly to ensure that no spurious applications succeed through lack of thorough examination of the merits of the application.

There is no magic formula in my mind for encouraging local industrialists to venture or expand into manufacturing companies or to induce those who are not in manufacturing to invest in manufacturing industries. We can only provide the framework for them. We can, however, be flexible and be open to suggestions by the would-be entrepreneurs in industry as to how the scheme can be improved. I can assure Members of the House that effectiveness of the various schemes is being monitored and there is rapport between the EDB and members of the public who are interested in the scheme. Over the years the schemes have, in fact, been expanded and amended to suit the requirements of the economy.

There was an observation made by the Member for Jalan Kayu that Government appears to be dragging its feet in the formation of the Trade Development Council. The Government has not taken a hasty decision in this respect because the participation of the private sector is crucial to the success of the Trade Development Council. A Trade Development Committee was formed with private sector participation and unless the private sector themselves are convinced as to the need for a Trade Development Council and understand how the Trade Development Council should be run to serve their needs, it is better for the Government not to take a decision on its own to form a Council without the warm and enthusiastic support of the private sector.

The Trade Development Committee has made certain recommendations to the Ministry which have just been received and these recommendations will be looked into. If we are convinced that these recommendations will help the private sector to export their products, we would only be too happy to approve and implement the recommendations of the Trade Development Committee.

I agree, however, that we should upgrade the standard of our Commercial Secretaries abroad and that we should set up more offices abroad to channel inquiries, to understand the overseas markets, and to feed such trade inquiries back to the exporters in Singapore.

Again, on tourism, it would appear that the sin of omission has drawn the attention of the Member for Jalan Kayu. Whilst no mention was made in the Annual Reports of the Singapore Tourist Promotion Board about the collective effort on ASEAN's part to attract tourism into ASEAN, we cannot conclude that no collective effort was made. But the point is taken that wherever possible Singapore should work in concert with the other four members of ASEAN to promote ASEAN as a destination region for tourists so that in coming to ASEAN they also come to Singapore.

There was a specific suggestion by the Member for Mountbatten that we should, if I understood him correctly, set up an animal farm where local fauna can be exhibited and shown to tourists. He may not be aware that we have a zoo in Singapore where we have adequate numbers of orang utans and apes. He might also wish to know that they live on food besides peanuts. Peanuts alone would not sustain them.

Mr Eugene Yap Giau Cheng: Sir, on a point of clarification. I am quite aware that there is an ultra-modern zoo known as the Singapore Zoological Garden in Mandai. But my suggestion was more than that, Sir. In fact, I have pre-empted the Hon. Minister's reply. That is why I drew a specific parallel with the American experiment of using whales and dolphins to exhibit their skills. My suggestion was actually to train our orang utans to exhibit their skills, Sir.

Mr Goh Chok Tong: Thank you for the clarification. But I submit that the skills can still be exhibited at the zoo.

There was a specific request by the Member for Khe Bong that Government should consider, in some tangible way, recognising the contribution of the working population. The suggestion was that Government should make an annual contribution to the Labour Foundation. My reservation here is that there are others who also make contribution to the economy. If we were to make a contribution to the Labour Foundation, I would not know but employers could also set up an Employers Foundation and ask for contribution, because I think they can also justifiably argue that their contribution to the economy is as great as the workers. I do not, however, intend to cast aspersion in any way on the contribution of the workers. That is recognised by the Government. The only excuse is perhaps an omission to mention it specifically in the Budget. But it is not possible to mention everything and every person's contribution in the Budget because to do so I would have to stretch the Budget Statement by perhaps three times its length. Of course, I must not forget the contribution of the Members of Parliament in the economic performance as well. And despite the tripling in length, I am sure there will still be omissions because if we look for omissions in any statement we can always find them. But I take the point that wherever possible the Government should recognise the contribution of the workers and appreciate it.

There was also criticism or reservation that the 5% preferential margin for local contractors would not be sufficient to enable them to compete against foreign contractors. That may be so but we have to bear in mind the objective of the scheme as well as the wider repercussions on the economy. The objective of the scheme is to grant a margin of preference to the contractors. But the margin must never be so protective that inefficient contractors can succeed in getting a job. To be effective in protecting certain local contractors, perhaps the margin would have to go up to 25% or 30% and that will be a cost to the economy in terms of higher cost of buildings. At the same time, the purpose of getting our local contractors out of Singapore to compete for jobs will not be served because under the high protective margin contractors would prefer to look inwards into the domestic market and thereby not improve their efficiency. The point is that if they are unable to compete in the local market with a 5% margin, I do not see how they can compete outside Singapore where there is no preference margin. If anything, the preference margin will be for the local contractors in the foreign countries. The point is made that we should encourage and give a helping hand to our local contractors but not to the extent that such assistance becomes a permanent prop without which they cannot live.

Some comments were made by Members of Parliament, including the Member for Tiong Bahru, that foreigners should not be allowed to set up retail outlets in Singapore. Perhaps this is a price we have to pay for being an open economy, wanting foreign investments in Singapore and, in fact, even encouraging foreigners in Singapore to compete with the locals so that in the process of competition efficiency will be upgraded amongst the local population. Given the lack of natural resources, the small base of our economy and the fact that manpower, other than strategic location, is about the only asset which we have, we have to take a conscious policy to ensure that the local population, given time, will be as efficient and as competitive in terms of production of output as any foreign country's population. We live by exports, and with an economy that is plugged in to the world economy, unless our manpower is efficient enough to be able to compete internationally, including competition against foreigners in Singapore, sooner or later we will find it difficult to sustain, let alone try to upgrade, the standard of living.

On protectionism, since Members of the House share my view perhaps there is no need for me to repeat that we are all against protectionism. But one Member did ask what specific measures we can take against the protectionist policies of the developed countries. Unfortunately, beyond working together with our ASEAN colleagues and the Group of 77 developing countries in international fora, there is very little we can do by way of specific measures or counter-measures against protectionism practised by not only the governments in the developed countries but also trade unions, as recently expounded by the Member for Anson. We will continue to lobby in international fora against protectionism, and we hope that the collective voice of the Third World will prevail against the weight of protectionism practised by the developed countries. It would be counter-productive if we were to introduce protectionist measures in Singapore. Fortunately nobody has suggested it as a specific measure against protectionism practised by others, because to do so would be to set off a further round of protectionism and thereby give further excuses for developed countries to enhance their protectionist measures.

A question was asked as to what has happened to the across-the-board 10% tariff reduction that was proposed some time ago. The proposal was superseded by the collective desire of ASEAN countries as a whole to have this exchange of 50 items initially, now increased to 100 items, each time they meet under the Preferential Trading Arrangement. There has been no further progress in the proposal of across-the-board tariff reduction that was suggested by some countries in ASEAN. Instead the five members are pursuing fairly earnestly with liberalization under the Preferential Trading Arrangement of exchanging 100 items per time per member.

In the Ministry of Finance's Addendum to the President's Address it was mentioned that in the course of the next few years the Government would sell off some of its shares in some of its companies. There was a question as to whether this has been done. This has not yet been done, It is still too early. We mentioned "in the course of the next few years." I am sure in the course of the next few years we will implement what we have stated in the Addendum.

There was a howler regarding "low cost housing" and "Law cost housing", but that was not the only typographical mistake, unfortunately, in the Budget Command Paper. Other errors have been spotted by my Ministry. (Cols. 657 - 658) They should not have occurred, but they have occurred in the rush to prepare the bulky, voluminous Command Paper after it was approved by the Cabinet. In the rush certain mistakes had unfortunately occurred. These errors will be corrected and the amendments given to the Members of the House as well as those who have a copy of the Command Paper. There were no other serious howlers except perhaps for the mistake where, instead of "Half-yearly" it has ended up as "Haly-yearly" [page 18]. The rest are minor mistakes which will be taken care of. Ministry - THE BUDGET FOR THE FINANCIAL YEAR 1979/80 (Cols. 657 - 658)

On the suggestion by the Member for Jurong that tax reduction should be considered for artistic works, a matter which he had raised a year ago, I am afraid that we have not decided that such exemption or tax reduction should be given for artistic works. There are problems of valuation, but more important is the priority consideration. He could perhaps argue from his point of view, and justifiably so, that at this point of time we should perhaps give consideration for artistic expressions by way of tax reduction. But we could also argue that now is not the time, but perhaps when the economy is more firm, when we are less troubled by future imponderables and when we are confident that uncertainty in the future would not rock the economic boat, that could be the time when we could be more liberal. In other words, the answer is no, but it will be considered at the right time.

The Member for Kampong Chai Chee gave us several interesting anecdotes which he has lumped under the theme of "justification of administrative blunders". He wanted a response although I do not know how to respond to his vivid account of anecdotes. But perhaps I can make a suggestion to him - if he can find the time he should compile all these anecdotes, similar to the work that has been done by Mr C.C. Leong under the title of "Youth in the Army". If he does so, and I think they are interesting anecdotes which contain lessons for the civil service as a whole, I can then assure him that I would try my best to make it compulsory reading for the bureaucrats.

Sir, I think I have covered most, if not all, of the points that have been raised in the House. If I have not, I would suggest to Members to raise them under the appropriate Heads by moving an amendment to cut the vote by $10, or to ask questions for oral answers. And to those whom I have tried to give an answer this evening but could not satisfy them, please feel free to pursue the matter because if we cannot convince Members of the correctness of our decision, then Members should try and convince us the other way. Only then can we arrive at the right decision or a decision that can satisfy everybody.

I have been given credit by several Members of the House for the Budget and also by the Minister for Finance prior to my presentation of the Budget that all credit would be due to me, it was my work and therefore the credit should be entirely mine. That I disagree. I would agree, however, with the silent implication that all blame or failures in the Budget will be mine. I decline to accept any of the tributes given to me for presenting the Budget because it is possible to have such a painless Budget only because every one in the Government, the workers, the managers, the people of Singapore, every one of them has put in his share of hard work over the last 20 years. The Government, including Members of Parliament in this House, has taken the right policy decisions, even tough decisions, in the past to ensure that the economy today is resting on very sound footing. The credit for the painless Budget therefore must go to the Government, the workers, the Members of Parliament in the House and generally the people of Singapore for making it possible. If we want a repetition of such painless Budgets, I think the lesson is: we keep on working the way we have been working and, even better, improve on our performance so that we would always have sufficient revenue to finance current and development expenditure in Singapore without the need for the Finance Minister to levy additional taxes. Better still if the economy can be enlarged and made to grow at a rate that can allow concessions to be given.

The Budget, Mr Deputy Speaker, Sir, has deliberately been toned down so that none of us would get the impression that we have done very well and therefore now is the time for us to enjoy the fruits and relax and liberalise completely, and to have more concessions or bigger concessions than those that have been given. I am therefore very happy that several Members, in particular the Member for Anson, have underlined the undertones of the Budget, that is, whilst we have done fairly well to-date, the future is indeed very uncertain and therefore we have in the next one or two years to consolidate our position and prepare ourselves to face an uncertain economic future.

Question put, and agreed to.

Resolved,

That Parliament approves the financial policy of the Government for the financial year 1st April, 1979 to 31st March, 1980.