ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [5th March, 1980] [2nd Allotted Day],

"That Parliament approves the financial policy of the Government for the financial year 1st April, 1980 to 31st March, 1981." - [Mr Goh Chok Tong, Minister for Trade and Industry].

Question again proposed. 2.48 p.m.

Haji Sha'ari bin Tadin (Bedok): Mr Speaker, Sir, allow me to continue with my speech which was interrupted on Friday when the House adjourned.

As I was saying, Sir, the message which the Hon. Minister had tried to convey to our people in order to meet the country's need for restructured effort and the development of skilled manpower, was loud and clear - that every one should try to realise his full potential, by upgrading his skills in order to earn a better income and attain better living standards. As our only resources are human resources on which our future economy depends, the development and realisation of the full potential of our population, are very crucial. They have to be done along all fronts - in the schools, the universities, and the colleges. Our institutions have to be geared to produce the best talents to meet the needs of our rapidly developing economy and changing society. Every able-bodied person, male and female, young and old, must contribute something towards the building of our economy.

In this respect, Sir, let me make further observations on some aspects of education which have been singled out in the Budget statement as one of the important areas to be focused in this restructuring effort to produce the required skilled manpower to meet the needs of the 80's.

Mr Speaker, Sir, to ensure the success of our restructuring exercise, as rightly mentioned by the Hon. Minister in his statement, "we need an abundant supply of skilled, technical and professional manpower. We are, therefore, assessing the requirements for professional, technical and skilled manpower in the 80's."

Sir, I would like to cast the spotlight on schools because this is an area that I know best and which I can speak with some authority. Sir, if our aim is to produce quality education, to bring out the right calibre of people to meet the requirements of skilled manpower, then what I have to say has some relevance in the context of our restructuring effort, especially when there have been many cases in the past of putting "round pegs in square holes" or vice-versa, as evidenced by the recent reorganisation of the Ministry of Education.

1. School Appraisal

Sir, it is quite obvious that a new management culture is emerging in education. The concept of accountability has caught on and schools will be expected to subject themselves to periodic external assessment and self-evaluation. While this is welcomed, it has to be accompanied by an appreciation that the ground must be prepared for the realisation of the concept. There is evident apprehension among principals that they may lack the skills and expertise to reorganise their schools to accommodate the concept and to assess progress. They envisage that their teachers will be required to undertake additional chores for the purpose and may not be fully appreciative of this. Hence, there would appear to be two prerequisites: first, the prior preparation of principals to measure up to the task, and second, to adequately publicise the concept and expectation of schools so that teachers are psychologically prepared for the innovation. Carrying the field with the new idea will be the surest way of ensuring its success.

2. Educational Structure

Since 1979 various changes have taken place in the content, structure and organisation of our education system. Much of this has been adequately publicised. There is indication that other changes are in the offing - that a Curriculum Development Institute of Singapore will be established (as is published in today's Straits Times) as well as replacement of professional officers by administrators and those with talent in creative writing at HQ and CDIS respectively. There is also considerable speculation on things to come. The ground is attempting to anticipate these changes in order not to be caught on the wrong foot. There is a feeling, Sir, that if the ultimate shape of things can be made known, rather than to see them take place piecemeal and on an ad hoc basis, there would be greater certainty of the direction and, therefore, greater confidence. Uncertainty breeds insecurity and the latter must necessarily slow down the pace.

3. Educational Technology

Emphasis to be placed on educational technology will gladden the hearts of teachers. However, to encourage the use of technology, there has to be an appreciation of conditions on ground level which could limit full use of technology. Physical limitations are known, as also is the need for non-teaching manpower. There has to be an organisational set-up within each school, which allows for a lead teacher to guide and promote the use of technology. The teacher will need to carry a lighter teaching load so as to be able to assist other teachers. Teachers themselves must be so placed as to be able to have sufficient time to set up aids they plan to use. It cannot be assumed that the mere provision of adequate technological aids will lead to an increased use. Ground conditions must be examined and adjusted to promote greater use of technology.

4. Communication

The frequency with which meetings of principals are called by the different departments has fallen. There is need, however, for principals to be periodically briefed on the thinking and emphasis of HQ, to come into contact with senior HQ officers, to obtain clarification direct from them, to get to know them and their thinking, and also to find out how principals are faring and adjusting to changes, problems encountered, etc. There used to be provision for all these through residential and non-residential seminars for principals. Perhaps either through reviving them or by some other means a more formal direct communication link can be established.

5. Moral Education

It has been sufficiently publicised that steps are being taken to develop syllabuses and textbooks for moral education. Much of the reinforcing, however, will have to come from a deliberately structured school programme of varied activities. Coupled with this there must be a programme to cultivate leadership traits, group spirit, a sense of respect and responsibility, etc. The teaching curriculum, however, is so rigid that there appears to be little scope to structure activities which promote such qualities. With plans to examine the overall curriculum, this point should be borne in mind so that there is ample scope for schools to build into its activity programme practical experiences to nurture such qualities and characteristics. Principals and teachers are concerned with the limited scope there is to develop the individual per se, as they are so caught up with covering syllabuses and preparing pupils for examinations.

6. Staff Development

If quality is to emerge in education, one of the basic requirements is an ongoing staff development programme. The Ministry of Education, no doubt, will seek to meet broad organisational needs and planning its own staff development programme. At the school level, individual needs exist and school-based in-service education has also to be conducted. Teachers are keen on such programmes which have more direct relevance and less inconvenient to them. Schools will need to plan and conduct such programmes drawing on whatever expertise is locally available or even available funds for the purpose as School Funds cannot be used or even if they can be are hardly adequate for the normal school programme.

Sir, I would like to support the Member for Whampoa for his very strong view on the issue of energy conservation which the Hon. Minister referred to, in passing, in his Budget statement without stating the full plans for the conservation of energy efforts. The Hon. Minister remarked that oil prices would continue to rise and that we could not avoid this trend but we "can minimise its toll on our economy by stepping up energy conservation efforts and diversifying our sources of supply to reduce political risks."

Sir, I would like to take up the idea which I suggested last year at a balloting ceremony that the Government should carry out a study to see whether it was feasible to close some Government departments and statutory boards on Saturdays in order to save electricity, in view of rising oil prices.

I do know, Sir, that some big firms have already switched to a five-day-week, and this arrangement so far has not affected their productivity and efficiency.

The working schedule could be readjusted so that the maximum of a 42-hour week could be spread over a five-day week instead of five and a half day week as at present. I suggested then that the PUB should consider conducting comparative studies in terms of electricity consumption with other countries before such a suggestion was adopted. I regret to say, Sir, that there was no response publicly to my suggestion, although I was told unofficially by a PUB high ranking official that it was not a bad idea.

Sir, why do I make this suggestion again this time, in this House? I think that the need is more felt now than last year and the situation will get worse in the next few years. Unless we introduce some drastic measures to conserve energy, we will be caught when the situation becomes critical. Sir, I am sure most workers will no doubt be happy to put in longer hours during the week to make up for the time lost by closing on Saturdays.

There is thus, Sir, no loss of production involved and, in fact, productivity might actually go up in a five-day week. Most department heads and office managers are, after all, only too familiar with the Saturday Syndrome which affects most workers. The mood is casual and very few workers put their minds fully on their work. It would be a safe guess to say that little or real work gets accomplished on Saturdays, especially in commercial houses which in any case have less business to transact with the closing down of international dealings.

Members of the public, Sir, who traditionally pay Government bills, renew licences, permits and the like on Saturdays, may find it inconvenient if all Government and statuto;y board offices are shut on Saturdays. But this is not an insurmountable problem and can be got round by naming a day in the week in which those offices dealing with the public remain open till late in the evening. Alternatively, some of these offices could keep to the existing six-day week with the officers manning the counter working on rotation on a five-day week basis.

With offices switching to a five-day week, some electricity savings will accrue. At most, there will be marginal savings in air- conditioned premises. But fuel saved by taking thousands of cars and hundreds of buses off the roads can be considerable. There might even be an additional bonus for bus commuters who, despite the improvements in SBS services of late, still suffer from the inconvenience of too many bus breakdowns.

Sir, the rationale for a non-working Saturday is really the saving of time, energy and money currently being expended on travelling to and from work. Sir, not many of us have the good fortune to live close to our work place or even have a direct bus to our destination. A two-way journey between office and home may take as much as two hours; reasonable enough if one works eight hours, but a most inefficient use of time if one's working time is only four hours. By the time most people reach home on Saturday, the better part of the day is gone. How much better it would be to work an hour or more each day during the week and be left with a full uninterrupted two-day weekend in which one could get away totally from work, and relax or engage in leisure activities such as a family gathering or even complete household chores left over during the week by the wife, thus helping to build a firmer and stronger family unit which we need badly these days. After all, the five-day week has long been the norm in most developed countries and not a few of the less developed ones. So long as the workers do not work less than the required number of 42 hours per week, I see no reason why this suggestion could not be given a try. Perhaps, Sir, a study team could be appointed to look into the details and other implications that may arise if this measure is implemented. I wonder whether the Hon, Minister would comment on the feasibility and practicability of this suggestion.

Finally, Sir, this year's budget is undoubtedly the most talked-a bout budget. It has brought joy to most people. We must, however, be prepared to face and tackle the challenges ahead. In rejoicing, we must also take heed of the warning the Government has underlined.

Sir, I give my full support to the motion moved by the Minister for Trade and Industry. 3.03 p.m.

Mr Seah Mui Kok (Bukit Ho Swee): Mr Speaker, Sir, I would like to join my colleagues in this House in congratulating the Hon. Minister for Trade and Industry for presenting a painless and acceptable Budget in Parliament on 5th March 1980. He also granted tax concessions on several items as well as a general reduction in personal income tax rates and granting tax relief for handicapped children, which we appreciate very much.

I am glad that Singapore's economic performance in 1979 is better than 1978 and the real GDP growth rose by 9.3%. It is more heartening to know that all sectors of our economy expanded, i.e. manufacturing, transport, communication, construction, etc. With the full cooperation of the Government, management and labour, we can make the year 1980 another year of economic progress, industrial expansion and better achievements. I am confident our target of 8 to 10% annual growth in the 80's is possible.

I fully agree with the Government's policy of giving higher wages to the workers and to induce employers to mechanise, automate and computerise and to switch to less labour-intensive processes, but we have to see that employers should not take advantage of the workers through unfair retrenchment. The job security of the workers should be protected. Also, workers should be willing to undergo educational and training programmes to update their skill.

Sir, I sincerely hope that the price of oil will stabilize as soon as possible. The frequent increases in the price of oil has caused great difficulties to several developing countries to improve their natural economy and industrial development. These developing countries still cannot overcome the problems of inflation, recession, unemployment, poverty, hunger and frustration. I hope the oil producing and industrialised countries will get together to solve these heart-aching problems. Unless all these problems are solved as soon as possible, the people of the developing countries will be so frustrated and disgusted that there will be global economic chaos and more unemployment leading to more revolution, bloodshed and aggression.

Sir, it is gratifying to see the full cooperation and unity of ASEAN. It has achieved full recognition as a regional grouping and gained the respect of USA, Britain, Europe, Japan and various other countries. Recently, ASEAN signed an Economic Cooperation Agreement with the European Community in Kuala Lumpur.

Sir, ASEAN must keep a good watch on our own region and the world situation, especially the occupation of Kampuchea by Vietnam and the invasion of Afghanistan by the Soviet Union. It is very clear that both countries are indulging on territorial expansionism which is a danger to world peace. ASEAN should maintain its non-aligned policy and not allow itself to be used as a pawn by the superpowers. We should always maintain our ASEAN interest and help whatever we can to achieve world peace and understanding. However, the United Nations Organisation must do its best to see that the Soviet Union and Vietnam withdraw from Afghanistan and Kampuchea respectively without further delay.

Sir, I fully support the intention of the Minister for Trade and Industry to harness our workers to produce higher value-added and skilled manufactures and services, and to develop our human resources, Also, we have to seriously look into the question of giving some monetary incentive payment to the workers for upgrading their skills and increasing their productivity. More productivity committees should be formed and the scheme of productivity payment should be worked out between the management and the union.

Sir, the Hon. Minister for Trade and Industry stated in his Budget statement that for FY 1980, income tax is expected to yield $1,423 million. I am happy to know that there is an increase of 30,459 taxpayers for the year 1979. May I congratulate him for giving us this good news. Also, the good work of the Comptroller of Income Tax and all his staff should be appreciated. I hope, for the year 1980, another 40,000 new taxpayers could be included, especially the self-employed. Surely the self-employed people who are owners of private houses, bungalows, luxurious flats, with Mercedes cars, can afford to pay income tax. The Registrar of Companies, the Registrar of Title Deeds and the Registrar of Vehicles can help to net in more tax evaders.

Sir, I would like to thank the Hon. Minister for Trade and Industry for his general reduction in personal income tax rates which gives relief to all without shrinking our taxpaying population with effect from Year of Assessment 1980. Sir, I appreciate the granting of a tax relief of $750 if a taxpayer maintains a brother or sister who is incapacitated by physical or mental infirmity and who does not earn any income and continues to depend on the taxpayer. Although the amount granted is not really substantial, something is better than nothing. Perhaps it may be necessary to put ail handicapped persons in a comfortable place with medical staff to look after them on the payment of a reasonable fee so that the handicapped person's mother, brother or sister can go to work and earn some income to help the family and so need not be tied down to care for them.

Mr Speaker, Sir, I support the motion in the name of the Hon. Minister for Trade and Industry. 3.10 p.m.

Mr Sia Khoon Seong (Moulmein): Mr Speaker, Sir, I rise in support of the motion standing in the name of the Minister for Trade and Industry.

The Budget statement presented by the Hon. Minister for Trade and Industry in this House on 5th March 1980 was well received, both within and without this House. The tax cuts as outlined in his Budget proposals, particularly in respect of personal income tax, were more than a welcome respite from the series of additional financial burdens imposed on Singaporeans in the past few months by way of price hikes in petrol, PUB charges, motor vehicle taxes, etc.

According to the Hon. Minister, these tax reliefs are not meant as "give-aways" because of a good year, but rather meant to serve as incentives to stimulate further economic growth and progress.

In many developed and developing countries, the increase in revenue to meet recurrent and development expenditures is often realised through the raising of taxes. This will always result in groans and howls among taxpayers. That the Hon. Minister for Trade and Industry does not have to resort to such a measure bears eloquent testimony to the soundness of two decades of Government strategies for economic development and taxation policy, and the prudent management of our State's finances.

The Hon. Minister is using the old recipes for economic success in framing the fiscal policy and strategy for further economic development in the ensuing financial year. No doubt, the old recipes will again bring us economic progress, barring any unforeseen external circumstances. There is good reason for us to share the confidence of the Hon. Minister over the economic future of Singapore in the coming financial year as well as the remaining decade of the 80's. But as it is said, "Man does not live by bread alone." A man's spiritual, cultural and social needs are just as important.

Having more and better designed HDB flats may provide excellent pictures for HDB annual reports, but may not necessarily bring greater happiness to the residents if the HDB estates remain as lifeless and harsh concrete jungles devoid of the spirit of gotong royong and neighbourliness of the old kampongs and old communities. In recent years, we see an increase in suicide rate, child-battering, divorce rate, and other undesirable effects of modernization. To what extent are these social and sociological aberrations related to the pressures of modern living and new life-styles? Are we paying a heavier than necessary social price for our economic progress and material advancement? Is our economic success fraught with more then the necessary number of pitfalls in both social and sociological terms? Are we doing enough to help our citizens, both young and old, to adjust to the accelerated tempo of the socio-economic transformation of our society?

Having Ministers and MPs periodically to lead national campaigns like "Respect the Elders", "Good Neighbourliness" may be useful but are certainly not enough to counter some of the undesirable effects of the modernization process of our society. Much more has to be done to understand and study in depth the sociological implications of economic pursuits in a changing social environment, and a more intensive and sustained programme of action is needed to counter the undesirable consequences.

But looking at the budget allocation for the Ministry of Social Affairs within whose ambit come the social and welfare programmes, one is not convinced that the Government is doing enough on welfare and social development. When is the Government going to stop treating the Ministry of Social Affairs as a cinderella Ministry and give it greater support in terms of financial and human resources so that it can be better equipped to meet its more challenging tasks ahead?

As we rev up the economic machines to greater speed in the 80's and pursue our economic objectives and material advancement more vigorously, we can expect more social aberrations to occur. Besides, our population pattern and behaviour will necessarily go through a change. For example, at the end of the 80's, several hundred thousands of youths of today will enter the adult world with a very different outlook and behaviour. It is not only they who will be different from us. Even the next generation of mothers-in-law and grandmothers will be different from the present and past generation of mothers-in- law and grandmothers. A next generation mother-in-law and grandmother is likely to be one who has given her best years working either in an office or factory, and thus spent very little time with her children and on household chores. She is likely to prefer spending her retiring years as a woman of leisure rather than getting herself tied down to the chores of looking after the home and the grandchildren. Our campaign on "Respect for the Elders" is presently run on the basis of inducing daughters-in-law to take in mothers-in-law by showing the usefulness of mothers-in-law such as looking after their children. At the end of the decade, this campaign may take on an ironical twist. We may then have to induce mothers-in-law to live with daughters-in-law. This is not because daughters-in-law by then are expected to become paragons of filial piety as a result of the success of the present moral education programme in schools. At the end of the 80's, daughters-in-law are likely to be working mothers who, unable to afford domestic help and unable to have access to creches, are only too glad to avail of their mothers-in-law services. We may then have to sell to these mothers-in-law the idea that they are given a second chance to enjoy the bliss of bringing up a family - a bliss missed by them as working daughters-in-law and working mothers.

An hon. Member: You did not mention sons-in-law.

Mr Sia Khoon Seong: I hope I do not convey the impression that I am only interested in the problems of mothers-in-law and daughters-in-law. I am merely using it as a further illustration to strengthen my point that as we are preparing to move into a different time-zone, the social and sociological implications of some of the measures we are taking will change and even take on a different dimension. We must anticipate and understand what these implications will be so that we can better cope with the problems that will arise.

Our economic success and material advancement must only be a means to an end, and the end must be the happiness and well-being of two million Singapore citizens. Their happiness and well-being must include, besides material comforts, spiritual, social and cultural needs and pursuits, Only when all such needs are fully met all round, can we then truly claim that we have served the people well. There was a time when financial constraints prevented us from giving fair emphasis all round and, understandably, we have to give greater emphasis to matters connected with economic development and survival. No doubt we still have to place our survival as the top priority, but we are certainly in a better position to do more in the other very important non-economic areas of development. The impression given sometimes is that everything is left to the overworked MPs and a small corps of dedicated social workers on a crusade to save Singaporeans from the ravages of modernisation on our morals, values and traditions, while Government just keeps on filling up its coffers, which are already awashed with healthy reserves.

Let me now turn to what the Hon. Minister said about encouraging the older people, who are still fit, to remain in employment. With respect to him, he seems to have gotten the wrong end of the stick. The problem is not encouraging older people who are fit to remain in employment, but rather enabling them to continue in employment. The practice of employers getting rid of workers with long service should be discouraged by the Government. The perennial problem of older employees being retrenched because of relatively higher wages rather than young employees is going to be further aggravated by the recent Government's policy of high wages. If the Ministry of Labour does not exercise greater supervision in curbing such malpractice, then the discontentment of the older workforce affected by such malpractice and their mental agony over their sense of job insecurity will reach a flash point.

Finally, let me touch on the call made by the Hon. Minister to Singaporeans to "save a part of their earnings to secure their own future, and their children's". I do not know whether the Minister, in making this call, had in mind that with the tax cuts he proposed, Singaporeans will now have more of their earnings for saving. If he had such notion in mind, let me quickly dispel it by telling him that the savings from recent tax cuts may not be enough to cover recent price hikes in PUB charges, petrol, road tax, and so on. Even those who can afford to put aside a little for savings are finding their will to save eroded by the fast diminishing value of money. Interest on savings notwithstanding, saving money in the bank is likely to bring in a diminishing return when we take the diminishing purchasing power of the dollar in future into consideration. The motto with some people seems to be "Better to spend now than later" if you do not want to run the risk of getting less value for your dollar in future.

An hon. Member: Buy a house.

Mr Sia Khoon Seong: If the Government wants the people to save, it must be able to come up with some attractive schemes to encourage people to save. Perhaps the Government may consider introducing a voluntary CPF savings scheme, in addition to the compulsory CPF contribution, where people are encouraged to voluntarily save between 2 and 5% of their wages with the CPF at tax-free interest rate of 8 to 12% when the savings is collected at retirement age. The quantum of interest rates must vary upwards within the range of 8 to 12% to bear some relationship to the rise in the cost of living index. On the other hand, anyone wishing to withdraw his voluntary CPF savings any time before reaching retiring age can do so but will only earn interest on his savings at current Post Office Savings Bank rates, The higher tax-free interest rate will help him not only to hedge against the diminishing purchasing power of the dollar but also earn some net interest on his savings in real terms. Tied to the introduction of the scheme is the assumption that Government will not increase the present CPF rates.

This scheme, if introduced, can achieve three objectives: (1) encouraging Singaporeans to save for old age, (2) accumulating funds to help the Minister for Communications to partly finance the MRT, and (3) soaking up the excess liquidity cash flow to dampen spending sprees, thereby muting some of the locally induced contributory factors to inflation. The Government loses nothing except the right to tax on the interest earned. Losing this right is also one way of compensating the CPF contributors for the low interest rates they earn on their CPF contributions. Using the CPF mechanism will ensure equitable distribution of benefits in the form of higher (tax-free) interest rates, since the quantum of savings through the voluntary CPF scheme I propose is based on a fixed range of percentages on wages.

Even if this proposal does not merit the Hon. Minister's consideration, I hope it has at least driven home the point that Singaporeans are more and more concerned about the diminishing value of our dollars, and its effect on our CPF savings and other retirement benefits. 3.23 p.m.

Mr Ng Kah Ting (Punggol): Mr Speaker, Sir, I rise to join my colleagues on the Backbench in congratulating the Hon. Minister for Trade and Industry for presenting another Budget which he himself described as a go-getter Budget. His tax cuts across-the-board brought cheers to many, but his imposition of higher excise duty on cigarettes as well as higher import duty on tobacco brought tears to the smokers. His other giveaways brought cheers too. Anyway, the Hon. Minister was quick to add a word of caution to all.

However, this Budget cannot be described as totally painless if we are to take into account the pains inflicted earlier. This point has been made by many Backbenchers and making it again will I think bring home the point that it is not at all a painless Budget. Up the tariffs on public utilities or PUB charges; up the ARF (additional registration fee) and registration fees for now cars and pick-up vans; up the road tax, and up the hospital charges. Coming up on the list is the price increase in the Housing Board flats, as mentioned by the Hon. Minister for National Development, and he urged applicants to quickly make up their minds to take the flats now or face an increase in prices after two months. I am told that the price increase for flats will be in the region of 10 to 15%.

Some hon. Members: More.

Mr Ng Kah Ting: Or more, that is right. Then the Minister mentioned that the increase in building costs is about 30%. I am just wondering how the prices will be adjusted. I hope the HDB will not square up the price hike. I was, therefore, not surprised when some of my constituents whom I spoke to, welcomed the hand-outs, the so-called hand-outs but at the same time they were equally quick to point out that the pains had been inflicted earlier on. In any case, they are happy that they are not further taxed. They expressed a sigh of relief on this point.

But, Sir, before I go on to the specifics of the Budget, may I touch on some other aspects which I think the Hon. Minister did not refer to. He increased the duties on cigarettes and tobacco, yet he missed out the hard drinks - liquor and wine. This is indeed a surprise, Since the intention is to discourage smoking, then may I ask, what about drinking?

The Senior Parliamentary Secretary to the Minister for Labour (Mr Fong Sip Chee): It is healthy!

Mr Ng Kah Ting: Is it really healthy when there are sicknesses like cirrhosis of the liver due to heavy drinking? I suppose the hon. Member for Kampong Chai Chee takes to that. God bless him then.

Mr Fong Sip Chee: Sir, I am not a drinker. I am just imputing that since the Minister does not levy tax on hard drinks he must have concluded that drinking must be healthy.

Mr Ng Kah Ting: I do not think so. Then what about tax on luxury items? I ask these questions not because I want to be impertinent, Sir, but because of the Minister's emphasis that "these reductions are given not because we are elated over our good economic performance, or because the Treasury coffers are overflowing, but because we anticipate some very difficult years ahead, including this year." I suspect that the Treasury coffers are indeed overflowing if one takes into account the surpluses of revenue.

Sir, the Hon. Minister is advocating thrift and frugality in spending the extra dollar. But he went on further to state that "the primary objective of the tax liberalization this year is to create maximum room for Singaporeans to exercise their enterprise to the utmost so that they are better prepared to cross the treacherous waters ahead." And then he concluded by saying that "our economic prosperity today is achieved through a partnership of government and individual effort, public and private savings. Present-day Singaporeans must, therefore, save a part of their earnings to secure their own future, and their children's. They must at all time avoid waste. They must not squander their tax rebates." However, I am unable to reconcile this statement. In sum total, the tax rebates are generous in terms of percentage, but in real terms they are not that much. One has only to take a cursory glance at Appendix Ill of his Budget statement relating to the proposed reduction in individual income tax to fully comprehend what I mean. For all these, the loss in revenue is estimated at $45.5 million out of a total estimated personal income tax collection of $476 million. This represents 10.46% of revenue loss in personal income tax collection. However, this loss can easily be recovered from the hefty increases in additional registration fees for motor cars and pick-ups/vans, the new registration fees on motor vehicles and the increases in road tax as well. I am reliably informed that the estimated revenue would be between $50 million and $60 million. Here is a case of robbing Peter to pay Paul; take from the left and pay to the right!

But, Sir, in any case, a tax concession means less tax to pay even if the range varies from $12.60 to $3,266 for those in the chargeable income group of $2,500 to $100,000. The Minister stated that the average reduction in tax is 16.1%. Hence the savings. This is to be welcomed. Nevertheless, if the Hon. Minister's intention behind the across-the-board tax reductions is primarily aimed at spreading the tax rates more equitably in particular for those in the annual income bracket of $20,000 to $100,000 whom he described as "carrying the greatest burden of income tax", then I would like to pose him this question. As incomes grow higher, the contributions to CPF become bigger. Yet the maximum allowed for tax exemption for both CPF contributions and life insurance premium remain unchanged at $5,000. I would, therefore, suggest that he gives this matter serious consideration because he spoke of Government's intention to spread the tax rates more fairly so that "the young will be encouraged to acquire skills and knowledge to earn more income" and at the same time repeated that "our people are our only resource." I would imagine that there must be many in this income bracket who would have life insurance policies besides contributing to CPF. A good mumber of them do not qualify for HDB or HUDC flats. Therefore, their CPF balances, though sizable in some cases, cannot be used at all until they reach the retirement age of 55 years. I would like the Hon. Minister to do something about it, bearing in mind the weakening in the purchasing power of the dollar. Could he not consider allowing this lot to invest their CPF balances? After all, he has allowed the use of CPF contributions to purchase SBS shares.

I would now like to refer to a suggestion I made last year, i.e. the pay-as-you-earn scheme for the taxpayers. This is made with a view to enable the taxpayer to make regular payments of his income tax liability through his employer. In short, income tax deduction at source. Although I understand that such a mode of payment is allowed by the Comptroller of Income Tax, I am informed that not many people are aware of such a scheme. Nevertheless, I believe it would be worthwhile to consider introducing such a scheme. I am aware that the smart taxpayer likes to pay his tax dues long after he has collected his wages for the year. However, I believe there are advantages in adopting such a scheme. After all, many countries have adopted this scheme. All that is required to do is quite simple. Instead of the Comptroller of Income Tax getting employers to submit individual income returns in respect of their employees for tax assessment, why not ask the employers to deduct the tax due from their employees and pay to the Comptroller at the same time? The Hon. Minister in reply may state that there is such a scheme and therefore a choice is there. Of course, but I would still say to him, "Think it over as this will relieve the Comptroller of a lot of work and, therefore, give him time to go after those self-employed who are still outside the tax net." At the moment, employers have to deduct their employees' CPF contributions to pay the CPF: not to mention the Payroll Tax and Skills Development Fund tax deductions.

The Hon. Minister made mention of the advantages the self-employed have over the wage-earners. He cited examples of doctors, lawyers, the successful hawkers, restaurateurs, property brokers and the like. He lamented that it would be many years before we could insist on proper bookkeeping and accounting for this group. I would suggest that for this varied group, the Comptroller insists that they keep a proper account of their income. Frankly, I see little or no difficulty at all. For if companies and wage-earners are required to submit their income tax returns, then may I ask why can the same not be applied to the self-employed? Surely there must be a way. Yes, legislation is one means to the solution of the problem. But I would very much like to hope that it will not have to take many years, as pointed out by the Minister.

The Minister also mentioned that, "The more citizens we have paying income tax, the more voters there are who understand that welfare programmes which sound such attractive giveaways from some magic cornucopia conjured up at election time, must mean an increase in their income tax." I would like to see that he follows the precept he preaches. May I add that the greater the spread of shouldering the tax burden by the people, the greater it would help to make the voters understand their share of their well-being as well as the nation's. In other words, they will realise their stakes and become true Singaporeans.

Since efforts have been made to enlarge the tax base, I would like to know how many more taxpayers will be added. The Hon. Minister mentioned that as at 31st December 1979, there were 389,387 individual taxpayers, representing an increase during the year of 30,459 taxpayers. I am quite positive that more can be brought in, provided the Inland Revenue Department is more alert and vigilant. With per capita income growing bigger, taxpayers must surely increase. I fully agree with him, Sir, that it is not fair for technicians, engineers, managers, professionals and civil servants to carry the bulk of the tax burden. I am, therefore, pleased to note that the Minister has realised this and I would very much like to see that he does something about this.

May I, therefore, add to my earlier remarks by urging the Hon. Minister to seriously consider them in the light of his own observations?

Touching on the development strategies for the 80's, the Hon. Minister spoke of the need to develop skills, to quickly upgrade and restructure our industries and services to produce higher value-added products. Speaking of the blue print for middle and higher technology is one thing but to draw it up and to carry it out is another. I am aware that some of these are in the pipeline, like the petrochemical plant which is going to cost us billions of dollars, but there are those industries which are both labour-intensive and low-skilled and which are difficult to upgrade. Therefore, such industries which are unable to upgrade themselves would definitely suffer. I would be grateful if the Hon. Minister would enlighten the House as to how such industries can be helped along and the number of workers involved. Or would these industries eventually have to fold up voluntarily? Then what would happen to the workers? Talking of workers, if we are to have new investments with higher value-added per worker, the House would be grateful to the Hon, Minister if he could also elaborate on the plans to find or recruit such workers.

For these industries which need to be upgraded like having to automate, mechanize, or to produce high-valued products, I would imagine that assistance can be given to them now that the Skills Development Fund has been set up. I can only hope that applications for such assistance will be expeditiously dealt with and are not bogged down by bureaucratic procedures. This is to ensure maximum utilisation of the Fund because the very purpose of setting up the Fund is to upgrade skills; and I for one do not wish to see an overwhelming accumulation of the Fund. I make this point because the Hon, Minister for Finance in reply to my question mentioned that a sizable amount has already been collected in the Skills Development Fund.

Therefore, I would like to urge that the blue print of the 80's be published in order to give both the local and foreign investors and local entrepreneurs the kind of middle technology and higher technology that Singapore would prefer in the 80's. The Hon. Minister did not elaborate nor specify this. He merely pointed out"we would like the manufacturing sector to become even more dynamic and lead the economy through consistent high productivity increases." This is a bit vague. In any case, if we can achieve this in the next decade, then I am quite optimistic that the stage can be set for advancement into higher technology in the 90's and beyond.

In which case, I would suggest that the Government should set the pace by venturing into areas that are both capital intensive as well as their need for higher skills. Here, a complementary role can be played by our local institutions of higher learning, namely, the University of Singa- pore, the Polytechnic, Ngee Ann Technical College and the VITB where courses can be tailored to meet the demand. These institutions should react quickly by expanding their courses and intake of students. Hers, I would like to know whether a manpower resource unit has been set up to look into manpower needs and distribution.

Next, I would like to touch on trade development. In reply to my question on the setting up of the Trade Development Council, the Hon. Minister stated the reasons against the setting up of such a Council. I accept the wisdom of his argument against this. However, I still %el the need to strengthen and expand the Trade Development Committee in the Trade Department. In this respect whilst I welcome the setting up of two new trade offices in the EEC, making a total of six and the possibility of setting up of trade offices in the People's Republic of China, I cannot help but wish to suggest a more aggressive trade development policy. We have to be realistic about the competitiveness of trade, in particular, the export trade.

Trade has always been one of the most important factors contributing to our GDP According to the Economic Survey of Singapore 1979, it was the third largest source of growth, contributing 18% of the overall increase in GDP.

The Minister attributed our export success to the ability of the multi-national companies (MNCs) in Singapore to sell their products in international markets through their own distribution outlets. Similarly, the Trade Department can more than assist our local manufacturers rather than to just state that the Government has been doing all it can to guide and assist them to increase their exports.

Conversely, there has been a steady increase in the number of trading companies set up in Singapore in the last two years. I am told that they are well-supported by manufacturers in their own countries in the export promotion of their products, culminating in some of our local trading agencies losing out their agencies. Hitherto these local agencies helped to build up the markets for their products. I am told that some have lost the agencies because of these foreign trading companies taking over from them. This is, therefore, unhealthy for Singapore and I would like the Hon. Minister to look into it because I believe our trading agencies have done a good job and can do the some job as well. In fact, our trading agencies have proved their ability to sell foreign products. A good number of products selling well in Singapore today resulted from this - the ability of our local trading agencies.

Finally, Sir, I would like to touch on manpower development, The Hon. Minister discussed the question of availability and quality of manpower in the 80's when we must need an abundant supply of skilled, technical and professional manpower. I am not entirely in full agreement with him in his observation, as I have my own reservations. Whilst we rapidly expand our university and technical institutions to increase the output of technicians, engineers and higher-skilled personnel, nonetheless there is a limit to the number that can be produced. After all, how many can we produce each year? If we take an aggressive step by expanding the courses and churning out more, there is still a limit to the number that we can produce. I would like to suggest that we adopt an open-door policy in the recruitment of professionals, be they architects, engineers or technicians, for their expertise. I am gratified to note that we are not allowing any closed shop practices of professional cartel.

We must also bear in mind our limited human resources. At the moment, we have a full-employment economy. Moreover, our birth rate is low. In short, every male or female Singaporean counts. What I wish to emphasise here are the kind of problems we will be encountering if we are over-zealous in making the grade for a much better life.

Whilst we scale to greater economic heights, we will definitely face more pressures because of greater expectations. A case in point is the demand for better housing and amenities. Just now my good Friend, the Member for Moulmein, made the point that all the HDB estates look like concrete jungle, devoid of aesthetic values. The low-cost housing policy has to be radically changed, not because of escalating costs in building alone but because of the demand for better design and quality housing. As a result, better and more spacious flats have to be built cum a more congenial and tranquil environment. And when we talk of reviewing policies to attract more females to take up employment as well as to encourage older people who are still fit to remain in employment, the problem of providing children with the best education and the caring of the old and infirm will be formidable. These are problems of our own creation.

Without doubt, our economy cannot be allowed to stagnate.

In conclusion, this go-getter Budget must be go-getting all the time. It, therefore, makes me wonder as to how far up we will keep on going to and whether we can have time to reflect on our ambitions and short-comings, Here, I am not being pessimistic but merely wish to voice my concern in that, all else considered, our Ship of State must maintain a steady course in the uncertain years ahead.

For this, I am quite positive that Singaporeans will rise to the challenge - we dare to achieve and think ahead.

On that note, Sir, I support the motion moved by the Minister for Trade and Industry. 3.55 p.m.

Mr Ho See Beng (Khe Bong): Mr Speaker, Sir, Budget time in democratic countries is traditionally regarded as the most exciting session of Parliament; often the fate of Government is decided at Budget time. But the practice of the Minister for Finance over the past few years has reduced Budget time to almost a public relations exercise. Budgets tend to be generally unexciting, and concessions are granted to certain sections of the community with the aim of keeping everybody happy.

But obviously, Mr Speaker, Sir, there is no need for the Minister to make Budget day exciting or unpalatable, because most of the unkind cuts are introduced before or after Budget day. Thus, we have a happy Budget day, but have to be prepared for new taxes and levies through the year.

Let me illustrate this tactic. Only recently came an unkind cut in the form of substantial increases in road taxes and registration fees levied on owners of motor cars. The registration fee for a private or hired car has gone up from $15 to the astronomical figure of $1,000 and for a company car to a more astronomical figure of $5,000. Never in the wildest dream of motorists could they imagine that registration fees would increase by so many folds. It would appear that our Government is trying to enhance its reputation for being "first" in many areas of activity.

Mr Speaker, Sir, it has been reported in the press that alarm bells would ring in the Registrar of Vehicles office when the car population hovers around the 140,000 mark. It is true that there has been an increase in our car population during the past few years. But so has there been an increase in the human population and the mileage of roads in Singapore. It is apparent to everyone that, simultaneous with the increase in the car population, roods have been widened and new roads built. This could well mean that, on an average, the number of cars per square metre of road has not really increased. Thus, if we look at the overall picture, it could well be that the number of square metres of road now exceeds the square metres of road occupied.

This, Mr Speaker, Sir, has already been pointed out by a correspondent to the local press on the 6th of March this year. The writer has given a clear picture of the situation, and I only need to quote two headlines, namely, "Vehicle growth picture would be more accurate if based on numbers per kilometro of road lane" and "Lack of integrated planning behind traffic congestion."

Mr Speaker, Sir, coming down to a few specifics, I would like to refer to the Minister's statement that the Budget has been formulated on the basis of financial prudence and development of objectives. He states that "we shall continue with the prudent policy of keeping Government recurrent expenditure down to the minimum and within the revenue expected to be collected within the fiscal year."

Mr Speaker, Sir, this is difficult to accept because we all know that during the past few years despite such assurances additional taxes and levies, not mentioned in the budget, have been introduced during the course of the year to produce the revenue which the Ministry of Finance needs to balance the budget. In other words, in the course of the year, revenues not expected to be collected within the fiscal year are raised to augment the resources of the Ministry of Finance. The Supplementary Supply Bill of $25 million is further testimony to the fact. Thus, it can be said that very rarely does the Government keep recurrent expenditure down to the minimum with the provision made in the budget for expenditure and revenue. For example, even though it has been stated that the increase in mad taxes and registration fees is to discourage people from buying new cars, nevertheless these produce revenue and are in the form of indirect taxation.

Mr Speaker, Sir, in the 1978 Budget session, I expressed unhappiness at the Finance Minister because he had refused the numerous pleas for an increase in the personal income tax relief which was fixed at $2,000 in 1948, at the inception of income tax in Singapore. I pointed out that this figure had remained stagnant since then, despite the inflation that had taken place during the past three decades. I also pointed out that this plea was on behalf of those in the lower income bracket, but all our appeals fell on deaf ears, and various inconsequential excuses were given to reject any increase in the personal relief.

On the other hand, Mr Speaker, Sir, the Finance Minister in that year raised the tax relief for those in the upper income bracket, namely, those earning around $50,000 per year and above. The rationale for the concession for those in the higher income bracket deserves repetition, and I quote [Vol. 37, col. 638]:-

'Aggravating the problem of equity or fairness in sharing the tax burden is the ability of many self-employed professionals to incorporate themselves into companies in order to sell their personal services, and thereby quite legally avoid paying tax at more than 40%, the company rate. Professionals and executives working for the public sector on salaries are unable to take advantage of this loophole in the law. Nor do they enjoy the perks of tax free "expenses".'

Mr Speaker, Sir, first of all, I would like to ask the Minister whether any research is being done or has been done to find out how many self-employed professionals have incorporated themselves into companies in order to sell their personal services to legally avoid paying taxes at more than 40%. Are figures available, because I am sure the House would like to know the basis of the Hon. Minister's decision.

Secondly, Mr Speaker, Sir, in the past few years there has been a considerable hike in the salaries of professionals and executives working in the public sector. These hikes, as will be recalled, were made on the recommendation of a high-powered committee to bring public service professionals and executives more or less at par with their counter-parts in the private sector. It should also be remembered that professionals and executives in the public sector enjoy certain privileges and have a greater degree of security of tenure than their counterparts in the private sector.

It was recently announced that the taxation policy of the Government bears review from time to time, and I will urge that this time this particular amendment be reviewed in the light of present-day circumstances.

In regard to personal relief, I would once again make a plea that it be reviewed and revised upwards. Mr Speaker, Sir, the Finance Minister has conceded that there is inflation in Singapore. In fact, it is for this very reason that the Government has deemed it prudent to set up the National Wages Council to provide guidelines to both the public and private sectors to enable them to adjust salaries in view of the rising cost of living. The consumer price index last month, for example, showed a 7.4% increase over January last year. If one adds up the quantum of inflation since 1948, it will be staggering, and yet personal relief remains stagnant.

It would thus mean, Sir, that the taxation policy is designed to favour those in the upper income bracket and not those in the lower income group. I am sure no one will object rewarding those who demonstrate high levels of performance and output but, at the same time, one must not ignore the lower income group who, after all, form the bulk of our citizens.

While still on the subject of income tax concessions, Mr Speaker, Sir, I would like to refer to the magnificent gesture made by the Finance Minister during the Budget session last year when he announced that pensions would be exempted from income tax. I had hoped that when he made this announcement, he would follow it up by stating that, having regard to the inflation, those who had retired many years ago when salaries were low and who were consequently getting small pensions would receive some form of special increase to enable them to keep up with the rising cost of living.

Mr Speaker, Sir, in the ultimate analysis, it will be seen that the removal of tax on pensions really benefits those in the upper income brackets, because the retired Division IV public servants - the postmen, policemen, clerks etc. - receive pensions which are so low that they are, for the greater part, not taxable. These are Government servants who served the Government faithfully until their retirement, and now due to circumstances beyond their control, namely, inflation and rising cost of living, they are hardly able to keep body and soul together. And what does the magnificent concession of tax-free pensions mean to them? Absolutely nothing, because they do not benefit in any way from it.

I fail to understand the attitude of the Minister in refusing to treat civil servants, past and present, equally. Serving officers annually receive the benefits of the National Wages Council in view of acknowledged inflation. But those who had served their time - I believe they served the Finance Minister also - and are now apparently of no economic value to the Government, are cast aside like squeezed lemons. The Government has no further interest in them. This is a sorry state of affairs and underscores our departure from socialistic principles and human values.

Several years ago retired civil servants in the lower income group were granted a small percentage increase in their pensions to meet the rising cost of living. Since then the Minister for Finance has obviously refused to consider all pleas of the pensioners that with their small pensions they are encountering difficulties in making ends meet because of the problems brought about by inflation.

On the other hand, Sir, the Government has deemed it fit to raise the quantum of public assistance for those who receive support from the Social Welfare Department. These increases, after only four years, although not over-generous, are nevertheless significant in percentage terms. They range from 20 to 50%. But what really matters is the principle underlying the decision to give this increase, namely, the acceptance of the fact that the allowances paid to these unfortunate people have been overtaken by the rising cost of living.

Thus, on the one hand, while the Government is willing to accept the fact that the cost of living for those on the dole has increased, on the other hand the Government apparently refuses to accept the fact that the cost of living of its ex-employees has also increased. And what is more disturbing is the fact that there is discrimination between those on the dole who have not served the Government, and its former employees who gave of their best while in Government service. This is a most invidious and inequitable attitude. This, Mr Speaker, Sir, I find most unreasonable and I would urge the Finance Minister to take immediate steps to revise the pensions of all those receiving small pensions, as he did several years ago. However, notwithstanding the criticism, I must congratulate the Hon. Minister for his better-than-last-year Budget which gave no tax relief to the lower income group, while this year's Budget grants tax concessions across the board. Hence, Mr Speaker, Sir, the Budget gets my support. 4.12 p.m.

The Minister for Trade and Industry (Mr Goh Chok Tong): Mr Speaker, Sir, much as I appreciate the compliments many Members have paid me in coupling my name with the Budget, I really feel undeserving of such compliments. All of us know that the present is the child of the past. This year's Budget has been made possible only because of the contributions made by all Singaporeans in the past, including hon. Members and Ministers in this House. They, more than I, deserve your felicitations.

The men who collect taxes are working in one of the oldest professions in the world. Known archaeological findings dating back to the year 1900 BC revealed in a clay tablet that even in those times tax was levied for public works. There was also evidence of complaints about taxes in a papyrus mil. Therefore, I was not the least surprised by the fact that despite a favourable budget this year there were brickbats.

The deadliest missile was launched by the Senior Parliamentary Secretary to the Minister for Labour who unfortunately is not here to listen to my reply. But we cannot wait for him to be here, and I shall therefore fire my salvo. Fortunately, he missed the target, possibly because he was restrained by the Whip. I gather that, had the Whip been lifted, he might not have supported the motion, and if he has enough support in the House, then the tax concessions which I have announced this year would not be given. I was impressed by the vigour with which he combed through my Budget statement several times, like a Customs inspector, but I was less impressed by the conclusion. When he criticised the budget as being devoid of political and social objectives, he has missed the wood for the trees. There is a place and time to state your political and social objectives and the overall Government policies, ministry by ministry and sector by sector, in fulfilment of these objectives. The Party manifesto is the place to state your political philosophy clearly and in case he has forgotten the political and social objectives, I shall quote one of the Party's objects from the Party manifesto - People's Action Party Constitution and Rules:

'2(c). To abolish the unjust inequalities of wealth and opportunity inherent in the present system;

to establish an economic order which will give to all citizens the right to work and full economic returns for their labour and skill;

to ensure a decent living and social security to all those who through sickness, infirmity or old age can no longer work.'

The question that follows is whether the present Budget fulfils the Party objective. If the Senior Parliamentary Secretary wants a statement of the Government's policies in fulfilment of these objectives by ministries and by sectors, the proper place is the President's Address. In his Address, when he opened Parliament on 26th December, 1978, the President had stated succinctly the objectives and programmes of the various Ministries. The Senior Parliamentary Secretary to the Minister for Labour should go through the Address again. The Budget statement is only a link in a chain of actions and programmes which the Government undertakes in fulfilment of its objectives, the primary objective being the overall good of Singapore. I am, therefore, surprised that despite the fact that he has gone through the Budget statement carefully he has missed the compass which he thought was missing from the Budget. This compass is the overall good of Singapore and that has clearly been stated in one of the lines in my Budget statement. But more important, the Budget is a programme with emphasis on economic action so that economic growth can be brought about to generate the surplus revenue required for us to fulfil our social and political objectives. The Budget must, therefore, be viewed as an instrument to fulfil these objectives, not a document in which you state or re-state your social and political objectives. But I do not wish to labour this point, Sir, not when the Hon. Senior Parliamentary Secretary is in "labour".

I would like to pass on to the more substantive comments, beginning with Economics. I have noted the seven points put across lucidly by the hon, Member for Whampoa. I thank him for his observations and I also thank him for his offer of services to help us to compile the GDP deflator. I shall ask the Chief Statistician in the Department of Statistics to take advantage of his offer. The hon. Member remarked that, whilst he agreed with the removal of protective tariffs, he did not quite agree with the timing because he anticipated that we were going to face some recessionary years. My answer to that is this. It is precisely because we anticipate difficult times ahead that we have to take action right now. If we do not remove this protective element during a difficult time such as now, we will never be able to do it in a buoyant period, because in a period of buoyancy these industries have a greater margin for inefficiency.

The Member for Bedok commented that local companies might not be able to compete with local based multi-nationals. I think perhaps he has not quite understood the point. If there is a local based multinational company in Singapore manufacturing the same product as a local company, that MNC will also enjoy the same protective tariff as the local company. It is true, however, that when we remove the tariff protection, local companies will be subject to greater competition from multi-national companies based abroad. But that exactly is the whole objective of the exercise - to put pressure on local companies to upgrade their processes in order to be able to compete in the world market.

The Member for Whampoa has also warned us against over-capitalization. He was supported, I believe, by the Member for Bedok. Here, in a sense, we are faced with a Hobson's choice. On the one hand, we have a scarcity of labour and on the other hand, we know that energy will become more expensive. It is almost a certainty that the cost of energy will go up. But there is a difference in going for more capital-intensive industries as against labour-intensive industries, and that is, the cost of energy will be applicable to all countries whereas labour cost is peculiar to a particular country. So if we go for the capitalintensive industries, even though we consume more energy as a result of our shift to these industries, other countries that go for similar industries would also face the same energy problem, and therefore our competitive edge will not be lost.

There was a specific question by the Member for Buona Vista as to why we need 12 years to reach Japan's per capita income of 1978 when in 1978 we had reached Japan's per capita income of 1972. From 1978 to 1990, we expect to double our per capita income in real terms. If we assume an 8% growth, eight times 12 will give us 96%. Compounding the rate of 8% annually, it would, of course, more or less double our per capita income during this period. It would be less in 12 years, but 12 years was a rough approximation. Japan's per capita income doubled from 1973 to 1978, but this was in current terms. So I believe here the Member could be actually looking at the Gross National Product in current terms whereas for the later period growth was in real terms. Anyway, this is my explanation of the confusion, and he and I can discuss in greater detail outside the House if he wants to pursue the matter.

The Member for Jurong asked for specific measures to be taken to attract females into the labour force. He remarked that the measures were not elaborated in the Budget statement. That is correct. He offered a few suggestions which, in fact, conform to the direction that we are pursuing, such as the opening of more creches, tax incentives and, studying the possibility of half-day work. In addition to this, wage is an important con- sideration. If female labour is paid a low wage and working mothers, in turn, have to employ domestic help, then there is little incentive for them to want to go to work. The higher wage policy which we are pursuing would, therefore, be a positive factor in attracting women to participate in the labour force. The location of clean, non-pollutive industries in housing estates is another measure which we have undertaken to help attract mothers to work in these factories, as it would afford them greater convenience and proximity.

There were a few comments on the influx of foreign unskilled workers, the need to train workers and the manpower resources. With regard to the influx of unskilled workers, we are conscious of the fact that a huge influx of unskilled workers into Singapore has undesirable implications, socially, politically and economically. The ease with which employers can get work permits to recruit unskilled workers from outside Singapore will, therefore, have to be controlled. It has been made more difficult so that they do not go out to recruit unskilled workers because of the higher wage policy in Singapore. We also have to ensure that a guest worker who comes to work in Singapore is paid the same quantum as a Singapore citizen worker, if he is doing the same work. In this way there can be no bias for employers to recruit foreign workers.

An hon. Member: Plus CPF.

Mr Goh Chok Tong: Plus CPF in the case of Malaysian workers.

The Skills Development Fund will provide the necessary finances for the training of workers who may become redundant in those industries which are not competitive or which will not be competitive in the future. Here, we shall be flexible and we shall extend as much assistance as we can out of this fund to those industries which have workers who will be affected by the upgrading exercise. There is a Manpower Unit in the Ministry of Trade and Industry. This unit has prepared a manpower plan which is being used as a working document to work out the number of workers, technicians and professionals required in the future to service the economy. We have also recently formed a Council for Professional and Technical Education, which is a Ministerial Committee, to look particularly into the upgrading of university education to produce the number of engineers and the kind of engineers which we will need to service an industrial society.

Passing on to the observations on ASEAN, the Member for Serangoon Gardens asked whether Singapore intends to propose a new industrial project, since our first proposal was not accepted by the ASEAN partners. It is easy to conceive a new industrial project but it is difficult to deliver it if we have to take into consideration the need to balance costs and benefits throughout the ASEAN region. To avoid a possible misconception, Singapore therefore is not thinking of a new industrial project at this stage.

The Member also asked what benefits we have achieved as a result of the various dialogues with the EEC, the USA, Japan, New Zealand and so on. The main benefit for Singapore and for ASEAN is a better appreciation of the economic potential and expectations of ASEAN. The dialogue has also brought about an increased interest in these governments as well as in the various institutions within these countries to have further economic relations with ASEAN countries, and with Singapore as a member of ASEAN.

On the specifics, we have held two industrial fora, one between the EEC countries and ASEAN countries in Jakarta and the other between ASEAN countries and Australia in Melbourne. There was some spin-off in these contacts made as a result of our attending these industrial fora. We have also taken advantage of the dialogues to discuss GSP, to make request for certain commodities end products to be included in the GSP. The rules of cumulative origin is also an outcome of the dialogue between the ASEAN countries and the countries that give the GSP. So there are distinct benefits from the dialogues between ASEAN countries and the countries outside ASEAN.

On fiscal measures, I got the impression that the main criticism was the fact that Government either raised the rates and taxes before Budget time or would do so in between budgets. Here, we have to make a distinction between rates and levies and taxes. Rates and fees are collected to provide services. If the cost of services goes up, there must be a quick adjustment of these rates and fees, otherwise the statutory boards or the Ministries that provide these services will run very quickly into deficit. Take the case of PUB tariffs. If we are to wait until Budget time before we increase the fees, the fees will have to be increased by a much greater quantum in order to recover the losses as a result of the oil price increase. Therefore, these rates and levies have to be adjusted as soon as possible when the costs go up.

Taxes are levied to collect revenue for general government administration. Road taxes could qualify under this definition of taxes. But we have a car population policy which Members are fully aware of, and if we are to defer the road tax increases or changes to Budget time, the public would know when to beat the increases. Therefore, the increases in road taxes must come with a suddenness which has shocked many Members in this House and members of the public so that there is no time for them to take advantage and beat the increases.

Mr Fong Sip Chee: Sir, point of clarification. I think the Minister missed my point. I raised a basic question: what is Parliament for? It seems that Members of Parliament are the last to discuss about taxes, and if Members are not given the opportunity to discuss such matters, then Parliament itself is a mockery.

Mr Goh Chok Tong: Sir, the Senior Parliamentary Secretary to the Minister for Labour has, in his usual over-zealousness, jumped to ask for clarification before I could come to the point. I was coming to the point that some criticisms made by certain Members of the House have validity from my own point of view. If tax increases involve policy considerations, I personally would agree with them that, wherever possible, there should be a discussion in Parliament. I am sure the points which they have made and the point which I am making are taken note of by my fellow colleagues, i.e. where the tax increases involve policy considerations, as far as possible they should be discussed.

Mr Fong Sip Chee: Hear, hear!

Mr Goh Chok Tong: Sir, on the hardy and perennial question of personal tax reliefs, several Members have again raised this issue despite what I thought was a rather adequate explanation in the Budget statement. I therefore would have to try again to pull the roots out of their argument so that we do not have a repeat next year or, as somebody else puts it, "We should not be frying the same rice again next year."

I need not go through the argument that we need to have as wide a tax base as possible, which has been detailed in my Budget statement. But perhaps I can give some figures to substantiate the point. If we were to increase the personal relief by $1,000, we shall be reducing the number of taxpayers by 14.6%, and if we were to increase the personal relief by $2,000 the number of taxpayers will be reduced by 29.8%. If this number of taxpayers do not pay tax, then there could be additional pressure on the Government to mount welfare programmes. It is with the idea of making them aware that if they wish to have such welfare programmes implemented by Government, then they themselves have to contribute to the costs through taxes that we want to have as wide a tax base as possible.

Comments were also made to the effect that the reduction in percentage terms was attractive but not in absolute terms. The answer is simple. If those within the chargeable income group of $1,000 are paying only $28 on the average, it is not possible for us to give them a tax reduction of more then $28. Sir, it is therefore the percentage reduction that is important - what is the proportion of the tax saved as a result of the across-the-board reductions to the tax that you are paying now? In order to show that the lower-income group are not penalised by not increasing the personal reliefs, let me relate the tax paid by the middle-income group and the higher-income group to the tax paid by those within the first chargeable income bracket and similarly the income as a number of times of the chargeable income bracket of $1 to $2,500. For the tax bracket of $1 to $2,500, if we take the mid-point of $1,250, the tax paid is $63. For the taxpayer in the tax bracket of $20,000 to $25,000, the income is 18 times more than those in the first tax bracket of $1,250 (I am taking the mid-point). For those in the tax bracket of $50,000 to $75,000, the income at $62,500 is 50 times more than those in the first bracket. If we consider the tax paid by those in the second tax bracket, i.e. those in the mid-point of $22,500, they will be paying a tax 50 times more than those in the first tax bracket as against an income of 18 times more. Those in the third tax bracket which I mentioned will be paying tax which is 256 times more as against an income of 50 times more. This shows that the lower income-group, despite the fact that they have to pay a tax, is paying tax at a very nominal rate. There is no hardship. The 20% reduction which brings their tax paid from $28 down by 20% is, therefore, a sufficient reason for us not to raise the personal reliefs. If we were to raise the personal reliefs alone without adjusting tax rates across the board by $1,000, the tax reduced for those in the bracket of $1 to $1,000 will be 100%. For those between $1,000 and $2,000, the reduction will be 66.8%. For those in the middle-income group of $20,000 to $25,000, the reduction will be 7.7%. For those in the higher-income group, $50,000 to $75,000, the tax reduction will be 2.5%. Therefore, there will be inequity and we will be biasing ourselves, consciously or unconsciously, against the very group of workers that is more productive, i.e. the middle-income group and the higher professional workers that can generate the economic activities to employ workers in the lower-income group.

I hope therefore that Members are fully convinced by the argument and we should not have a repetition of this issue in subsequent years. There is nothing sacrosanct about the level that was fixed 30 years ago. The personal relief of $2,000 that was fixed 30 years ago was fixed by another government with different political and social objectives. There is nothing sacrosanct about that and there is no need for us to relate that figure to the real cost of money today.

There was a specific question as to whether the Government would consider waiving the tax on PUB bills. The answer is no. Those bills which total $80 or less do not attract tax at the moment, and some 86% of households have bills failing below $80 per month. Therefore, the tax is on the profligate consumers with bills exceeding $80, and the surcharge is imposed with the view that the consumption of power, gas and water ought to be as minimal as possible.

Cultural activities do, in fact, enjoy favourable treatment by the Ministry of Finance. Some of the institutions are granted exemption from tax. They are given IPC (Institution of Public Character) status so that all contributions to these funds such as the Cultural Fund will not attract taxes. There is also exemption for worthwhile cultural activities. So we have enough flexibility over here to induce and promote cultural activities.

There was a comment as to whether we could increase the contribution of CPF beyond the current ceiling of $5,000 for tax purposes. The ceiling has been raised last year from $4,000 to $5,000. I think that is an adequately high level. The suggestion to pay as you earn (PAYE) by the Member for Punggol does not appear to be workable. It is administratively costly. There is the additional work of adjustment of the actual tax to be paid against the monthly deduction of tax by the employers. The Income Tax Department has not yet fully computerised the files and its transactions. Perhaps later on when it is fully computerised there may be a possibility of implementing the PAYE scheme. But we have to be conscious of the bias against the salaried workers. If you were to deduct the salaries before you can compute your tax, you can do so only against the salaried workers. Those who are self-employed do not come under the scheme. So we are again biasing ourselves against the salaried workers.

I would not be able to answer the Member for Punggol as to the number of new tax-payers that we have taken into the net. The figure for last year was about 39,000. For the coming year, my answer is: we should try to net in as many as possible and hopefully to exceed the figure of 39,000.

I do not have the figure on the number of people who have incorporated themselves into companies at this stage, but I shall look into the possibility of giving this figure at a later stage; maybe in answer to one of the Questions for Oral Answer by Members of the House.

Moving on to the administrative field, there were four issues that were touched on. One is the comment on computerisation by the Member for Telok Blangah; a suggestion for a 5-day week instead of a 5 1/2-day week; a comment on increase of the quantum of pension to pensioners, and a suggestion on CPF voluntary savings scheme.

On computerisation, I find the comments by the Member for Telok Blangah helpful. Many of his comments are, in fact, already being implemented. The need to co-ordinate acquisition of computers, for example, is being done by the Computer Services Department. All forms of acquisition will have to be processed by the Computer Services Department. We have to balance the need for a central computer against the need of Ministries and departments to run their own computers. In some cases it is more effective for these Ministries and departments to run their own small computers than to be dependent on a mammoth central computer.

I am uncertain whether we will save enough energy by having a 5-day week as opposed to a 5 1/2-day week. If we are retaining the number of hours worked, the hours saved on Saturdays will be used up on the week-days. Therefore, the savings which we can have by closing offices on Saturdays will not be as great as we think. It also depends on what alternative uses the cars are put to. If all the cars were kept at home on Saturdays, then there will be savings in terms of petrol because the cars will not be making trips to offices. But at the same time and in the same breath, the Member argued that over the weekend people could enjoy greater recreational activities. So I suspect the cars will be driven farther away than the offices and, instead of saving energy, there will be an increase in consumption of petrol. But more important, in our set-up we must not give the impression that "We have arrived" and can afford a 5-day week like many of the countries in the West. If we do, given a few more years there will be pressure, perhaps from the Member for Bedok, for a 4 1/2-day week because some other countries are practising 4 1/2-day week. So we need to have a different philosophy. We need to work. We need to provide services over 5 1/2 days; in some cases, over seven days a week, 24 hours a day. The benefit to the economy of a 5 1/2-day week, I believe, exceeds the energy that could be saved, although I am not sure whether we, in fact, will be saving energy by having a 5-day week.

On pension, the Members who made the comment may not be aware that, in fact, the quantum for the New Singapore allowance has been increased with effect from the 1st January of this year. Circulars have been sent out to the Pensioners' Association. The Accountant-General has been asked to pay this and I believe the revised quantum has been paid out to the pensioners. As a matter of interest, Members may wish to know that for a pensioner drawing a gross pension of $100 or less per month, the allowance has been increased as follows:

The pre-revised figure is an allowance of 50% of gross pension with a minimum of $15 per month or a maximum of $30 per month. Revised, an allowance of 50% of gross pension with a minimum of $35 per month or a maximum of $50 per month will be paid. There is, therefore, an increase of $20 per month. For a pensioner drawing a gross pension above $100 per month, pre-revised, a flat rate allowance of $30 per month, subject to a maximum gross pension of $650 per month. Revised, a flat rate allowance of $50 per month, subject to a maximum gross pension of $670 per month. This will benefit the previously non-taxpaying pensioners. I hope this will meet part of the way regarding the complaints raised by Members of Parliament that the Government has neglected this particular group of people who have contributed to the economy of Singapore in the past.

The Member for Moulmein suggested the idea of a CPF voluntary savings scheme. The real question is whether we can afford to pay an interest rate of 8-12% on a voluntary savings scheme. We have the institution in the POSB whereby the public is urged to save and the savings are exempted from tax. The Member's proposal is to have a voluntary saving of 2-5% going into the CPF, attracting a return of 8-12%. So the key issue is whether the CPF can afford to give a rate of return of 8-12%. The CPF will have to invest the funds to have a return higher than this figure if it is to be able to afford to service this return on a voluntary saving. The more important point is the observation that the funds in the CPF are diminishing in value and that therefore a way must be found whereby the CPF depositors can protect as much as possible the real value of the funds in the CPF. This is the real concern. I do not have any ready answer on how we can do this, but I think it is serious enough for us to take it up with the Minister for Labour to see whether we can find a way whereby the real value of at least part of the CPF deposits of those who are now not enjoying HUDC or HDB purchase benefits can be preserved.

I believe I have covered most of the points. In case I have not, Members of the House are at liberty to ask them in the form of Questions for Oral Answer at a later stage. With that, I thank Members of the House who have taken time to give me some useful constructive comments.

Question put, and agreed to.

Resolved,

That Parliament approves the financial policy of the Government for the financial year 1st April, 1980 to 31st March, 1981.

Mr Speaker: At this stage I propose to take the Suspension. I suspend the Sitting and will take the Chair again at 5.30 p.m.

Sitting accordingly suspended at 4.57 p.m. until 5.30 p.m. Sitting resumed at 5.30 p.m