ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Mr M.K.A. Jabbar (Radin Mas): ( In Tamil): Mr Speaker, Sir, I wish to thank, through you, the Hon. Minister for Trade and Industry for presenting the 1982 Budget in such a cogent way that everyone can understand the financial policy of the Government. When I spoke on last year's Budget, I stated that the PAP is a democratic socialist movement. Proof of this can be found in the records of this House. I wish to emphasize the same fact once again this year. I can cite statistics to prove this from the time of colonial rule and the previous governments. We do not have to beg from others. From the period of British rule and the previous governments, I can give statistics to prove that we have achieved 23 years of political development. And our country has achieved progress in many areas. But people in some quarters are hiding the truth and are asking whether he PAP Government is a socialist Government. I wish to cite some examples.

Since some of my colleagues wish to peak, I shall make my points brief. I read in the newspapers that the Hon. Prime Minister of Malaysia, Dr Mahathir Mohd, has said that his country will benefit by learning from its neighbouring country, Singapore, how its administration has developed, rather than learn from other foreign countries. That being so, we can see the progress our people have made under PAP rule, Everyone can see the leadership qualities of the PAP and the hard work the PAP has put in.

Mr Speaker, Sir, in some countries around us, we can see guided military rule by military officers. One can see some governments plagued by riots and communal unrest. Further, we can also see despotic officers seeking revenge against one another. We can also see some governments suppressing the real aspirations of trade unions while claiming that they are true socialists. But we are the real socialist Government. We are the true socialist movement. Since our country is small, with no natural resources, we are wholly dependent on our human resources. Chinese, Malays, Indians and Eurasians live in harmony, without any prejudice, calling themselves Singaporeans. Happiness in this country is permanent. The PAP has helped to achieve this.

I wish to cite another example. Though Singapore is small amidst major world powers, the people of the world have complete faith in our leadership. That is why Professor Tommy Koh has been appointed Chairman of the international Law of the Sea Conference. He has taken the great responsibility of uniting the various nations. Does this not show that we are socialists?

Mr Speaker, Sir, we have seen communal, racial and religious riots in many democratic countries in the world. Even children and infants have been killed in many countries. They are living in misery. But in our country we have prevented these events from happening.

Our Government has formed Residents' Committees, the Citizens Consultative Committees, community centres and Meet-the-people sessions. Were they not created by the PAP Government? Nobody can deny that the PAP has achieved this.

Mr Speaker, Sir, yesterday in this House, the Hon. Member for Anson touched on the NTUC. As I am a trade unionist involved in this organization, I wish to give my views. We have great faith in the Minister for Trade and Industry and his officials. Before the Minister prepared the Budget Statement, he invited representatives of the NTUC and its affiliates to discuss and give their views on the Budget. We are indebted to him for this. The National Trades Union Congress dedicates itself to the growth and progress of our Republic. The trade union movement is an important movement in Singapore. Through tripartite cooperation, it has set an example for industrial peace. The National Trades Union Congress has done, and always will do, things in the interest of the nation at heart. Through its many stalwarts, the Labour movement has helped to achieve progress. We can see it in this House. For example, the experienced Mr Ho See Beng, Mr Seah Mui Kok, Mr Eric Cheong Yuen Chee, Mr Sia Khoon Seong are Members of Parliament. They are given the opportunity to voice their views. Being Members of this House, nobody can deny that they are able to voice the views of the workers. People know that their views are heard in this House. One person from the National Trades Union Congress is a Minister without portfolio. This was mentioned yesterday.

The workforce itself is indebted to the Government for appointing a trade unionist as Minister. We are proud and consider it a boon to have a trade unionist as a Minister. We thank the Government for this. But the Member for Anson, without reason, seems to criticize this. This has hurt the feelings of the workers of Singapore.

The NWC recommendations were made in the national interest and with economic growth in mind. I think these recommendations make very good guidelines for wage increases. This is my view. If these recommendations are legislated as some want it to be, certain capitalists may be dissatisfied and pull their investments out from our country.

But some managements have made some mistakes, and because of this, some people say that the second tier Nwc recommendations have not been implemented properly. So certain people have been disillusioned by this. Having the national interest at heart, Ministers should rectify the position. The cooperation of workers and management should be enhanced by this. The sorrows of the daily-rated public employees have been brought up by my colleagues here. They should be given better living standards. But one more point I wish to bring up is that, once the NWC recommendations are announced, hawkers quickly jack up their prices. But some workers do not get the NWC wage increases. As some say, the hawkers do not understand that not every worker benefits from the NWC recommendations.

Yesterday, the Member for Anson supported job-hopping. I do not support it. Job-hopping is something we should not allow. It may cause many problems. Some workers have job-hopped because they want to get more money. But this affects the discipline among the workforce and that is the reason why job-hopping is not encouraged. Therefore, we should not allow job-hoppers to use Singapore as a training ground.

The NWC recommendations should remain as it is and should not be legislated. The Government should approach other institutions and get their guidelines regarding the NWC recommendations.

Our Government has conducted religious knowledge classes to promote honesty and discipline among students. All the religions in Singapore support this move, but at the same time there are some shortcomings about which some races are not happy, and I wish to bring them to the notice of the Minister. It is thought that all Muslims have to learn religious knowledge in the Malay language, but there are Muslims, Christians and Hindus of Indian origin who wish to study religious knowledge in the Tamil language. I think this request should be given consideration. Since the Government's policy is to give equal status to all the four languages, the people feel that the Government should do something to strengthen that policy. I know that problems may arise both in the classroom and among the teachers in the teaching of this subject, but I believe that there will be cooperation if something is done to fulfil their desires.

The Ministry of Home Affairs should be praised for taking some bold action. Recent arrests made by the Ministry has some importance. It took two raids to stop the plan for terrorism, sabotage, murder, robbery, arson, assassination of political leaders and overthrowing the Government with the assistance of foreign aid. These courageous actions should" be commended. The arrest of Zainal Abidin and his group was given great publicity over television. The opinion of many people is that such elements who are involved in subversive activities should be referred to as "anti-nationals" and should not be referred to by their race or religion. Indian Muslims in Singapore or the Malays do not lend any support to this kind of activity. It is better that no reference is made to religion or race. My appeal is that I hope better forms of publicity for such future events could be found so that we can create a better and progressive nation.

On the Ministry of National Development, I wish to comment that the old one-room rented flats have no proper facilities to dispose of their rubbish. I agree that those living on the upper floors must not cause any nuisance to those on the floors below when disposing of their refuse. But the HDB does not know that some of the rented one-room flats on the lower floors have not been provided with sufficient facilities for the disposal of rubbish. The Ministry and its officials should look into this problem. Where are they going to dispose of their rubbish?

I wish to bring another point to the attention of the Ministry of National Development. Under the rules of the HDB, if the family income of husband and wife is $620 per month they do not qualify for rented flats. However, they may purchase a flat. In order to qualify for a rented flat, either the husband or the wife has to resign. By resigning, they would get a smaller income and thereby qualify to rent a smaller flat. Will the Minister raise the income ceiling to avoid this kind of a situation? If he does, I can assure him that those in the lower income group and the poor people would be most grateful to him. For example, how can a couple, who are hawkers by occupation and therefore have no CPF savings, be able to purchase HDB flats? I humbly request that the $500 income ceiling should be raised so that some of these people would be able to rent flats.

Mr Speaker, Sir, I thank the Minister for Trade and Industry for his 1982 budget. I thank you for allowing me this opportunity to speak and also may I say that I support the Motion in the name of the Minister. I repeat that only through the PAP will our country be prosperous. 5.39 p.m.

Dr Chau Sik Ting (Thomson): Mr Speaker, Sir, I would like to join hon. Members of this House in congratulating the Minister for Trade and Industry for presenting a painless Budget Statement which has drawn up an economic development strategy for the 80's.

Manpower, with capital and land, are the three basic factors of production. The cost of repair of many items in the nature of capital investment, such as plant and machinery, fixtures or premises, are allowable as tax deductible expenses incurred in the production of income. The irony is: whilst the cost of repair of machinery, fixtures and premises is allowed tax relief, the cost of servicing and repairing the human body as the basic factor of manpower is disallowed. The cost of repairing the human body could be in the form of hospitalization or outpatient charges. For hospitalization, and I stress hospitalization only, the charges can be extremely high, particularly if the stay is for a prolonged period or the hospitalization involves complicated surgery or other medical procedures. It would seem a good idea to also allow hospitalization charges to be tax deductible.

Generally speaking, hospitalization charges for the public sector employees are being taken care of by the Government. However, they still have to pay 20% and 50% of the ward charges, respectively, for themselves and their families. In the private sector those who are in the employ of companies are to a certain extent also being covered by their employers. Again, this is not to the full extent but subject to certain limits. There is yet a third group of people in the private sector, namely, those who are self-employed. They have to pay fully for their hospitalization charges. Would it not be fair also to allow hospitalization expenses for curative purposes for this group of people to be tax deductible?

Mr Speaker, Sir, we welcome the tax concession in respect of the care of aged parents as provided in the Budget Statement but it is far from adequate. Much emphasis has been given of late to encourage the three-generation family. As such, there will be an increasing number of people who have to take care of their aged parents. Should these aged parents incur hospitalization expenses, it would be an added incentive to our young working population to support their aged parents if tax relief can be claimed for hospitalization expenses.

The point I would like to make is that, in the matter of tax relief, due emphasis must be given to the promotion of the physical well-being of human resource. Whilst for the care of the aged, such a tax relief will constitute another incentive for our young working population to look after their aged parents. This move will be in line with our Government's policy to foster closer family ties in a three-generation or even a four-generation family and, in rare cases, a five-generation family.

This added tax relief hopefully may also influence patients to seek treatment in private hospitals, thus relieving the pressure on our public hospitals. Sir, in making this proposal, two questions came to my mind. First, can we afford such a tax relief? I think the answer is yes. Secondly, will there be, as a result, an increased consumption of our hospital services? The answer is no. Certainly Singaporeans, or for that matter Asians in general, do not look forward to hospitalization. It is something to be avoided. Moreover, even with this tax relief, a taxpayer in the 20% tax bracket, for example, still has to pay for the bulk of the hospital bills, i.e. 80%.

I am aware that there will be difficulties with implementation but such difficulties should not preclude consideration of this proposal. Rather they should be successfully overcome as this Government has done with almost all the difficulties ii has been confronted with.

Mr Speaker, Sir, we are able to have such a painless budget together with several tax concessions because our people have worked hard under an able leadership to build a strong economy. With more hard work and further upgrading of skills, we will have a sustained economic growth and a healthier state of finance such that the Hon. Minister would in due course consider this proposal of individual tax relief for hospitalization expenses.

Sir, I support the Budget Statement. 5.45 p.m.

Mr Lim Boon Heng (Kebun Baru): Mr Speaker, Sir, it is the duty of an elected government to bring about a better life for the people. For over two decades, this Government has continually sought a higher standard of living for each and every citizen. The results of its actions are visible, tangible and measurable. 70% of our population live in decent low cost HDB flats. There is a place in school for every child, Everyone who wants to work has a choice of jobs; there is no unemployment. Real incomes have steadily increased. Our workers can afford luxury items as they enjoy a higher standard of living.

Those who aspire to form the government would do well to study how this has been achieved, rather than engage in rhetoric. Words alone do not create wealth; action does. The result of this Government's actions is a matter of public record. Only a confused mind with a ragged vision and distorted arithmetic can fail to see the social and economic progress of our people.

It is a pity that the democratic system occasionally throws up aberrations. Aberrations notwithstanding, we will continue to pursue a yet higher standard of living for the people.

For those who are willing to listen critically, the Budget Statement by the Minister for Trade and Industry is a statement of concern for the continued well-being of Singaporeans. The restructuring of our economy is essential to free us from the bind of low-wage industries and to allow us to maximize the potential of our workforce. Higher incomes are linked to higher output through higher skills.

The Minister for Trade and Industry has stressed once more that manpower training and development is a decisive factor in the restructuring of our economy and in achieving the objective of a higher-skilled and better paid workforce. This year, the first of three objectives of the Budget is to increase the supply of skilled, technical and professional manpower needed to facilitate the restructuring and upgrading of the economy. 5.48 p.m.

[Mr Deputy Speaker in the Chair]

Mr Lim Boon Heng (Kebun Baru): Reflecting this, the provision for the Ministry of Education has been increased substantially by 45.6% over fiscal year 1981. This expenditure will provide more opportunities for those who are still in school through more places being created in the tertiary, vocational and training institutions. This investment will result in a better qualified younger workforce. We must ensure the highest return from this investment by ensuring that the curricula of courses conducted by these institutions are updated in order to equip the students with the knowledge and skills relevant to the technologies of the 1980's and beyond, The curricula must have a general base to enable the graduates to apply their knowledge in different sectors of industry and to build on what they are taught. We must recognize that the pace of technological advancement is so rapid that no one can assume that the knowledge or skill acquired in our educational institutions will be adequate for a life-time career. We must impress on our students that it is necessary to constantly upgrade their knowledge and skills, to keep abreast with the latest technological advancement. Failure to do so is to risk technological obsolescence. When our students leave the training institutions with the right attitude towards knowledge and skills, they will be able to adapt to the continual upgrading and restructuring of our economy as we seek yet higher levels of achievement.

With the investments now made for the education of the younger generation, we expect that those entering the job market for the first time will have little difficulty provided we are able to attract investments with higher technological content.

For those already in the workforce, the problems and prospects are somewhat different. Their ability to cope with the technological content of the new types of jobs in a restructured economy will be constrained by the education that they have received and the training that they may have been provided by their employers. We must be concerned that the educational level of our present workforce is relatively poor. According to the Report on the Labour Force Survey of Singapore 1980, 11.3% of the workforce have never attended school, 13.8% have no qualifications (below PSLE) and 32.6% attained primary education only. Therefore, no less than 57.7% of our workforce have primary education or less. How will these workers be able to adapt to higher technologies? We can help them make the change by providing them with another opportunity to acquire a basic education.

Employers should play a leading role. More companies should be encouraged to follow the examples set by Telecoms and the Port of Singapore Authority in providing training opportunities to those who have unfortunately missed a basic education. This is one of the best ways to foster company loyalty. Unfortunately, training is not generally included as an integral part of company corporate policy. True, there are employers who do provide comprehensive training and have co-operated with Government or EDB institutions. The majority, however, have no manpower development plans. This is the primary cause of the low utilization of the Skills Development Fund.

It is quite typical for a new employee to be given a brief and cursory introduction or training programme before he is put on the job. Thereafter he is expected to pick up as he works. Our employers do not seem to realize that this practice is wasteful and an inefficient utilization of manpower. It is important for employers to look at continual training as a means to obtain the best out of the workforce. When training becomes a pan of corporate policy, there will be a positive improvement in work attitudes.

It is gratifying to note that there are plans to upgrade the skills of existing workers on a wider scale through the establishment of an Institute of Continuing Occupational Development. I hope the Minister will take this opportunity to elaborate on these plans, with particular reference to the following points:-

(a) Will the Institute carry out a study on manpower requirements, and will the projected demand for specific types of skills be made known? Such a projection would greatly assist those in the workforce to pursue relevant courses in upgrading their skills.

(b) Will the Institute provide a range of courses tailored for workers of different educational levels?

(c) What provisions will be made to facilitate attendance by existing workers who would at the same time have to continue to support their families? Will the problems of shift workers also be taken into account?

(d) As there is an inherent anxiety among older workers over their ability to acquire new skills, will the Institute give this category of workers special attention? Mr Deputy Speaker, Sir, since manpower training and development is a decisive factor in the restructuring of our economy for a higher skilled and better paid workforce, it is important that the Institute of Continuing Occupational Development be established as soon as possible.

On that note, Sir, I support the Motion. 5.56 p.m.

Mr Bernard Chen (Clementi): Mr Deputy Speaker, Sir, in his annual Budget Statement, the Minister for Trade and Industry made the following reference, and I quote:

'One recurring feature of Budget statements in recent years is that each year the statement has warned of difficult times ahead, and each year our economy has grown strongly.'

Hon. Members of this House will recall that year in and year out the Finance Minister, and of late the Minister for Trade and Industry, came into this Chamber and painted gloomy pictures of worrying times ahead but yet concluded that Singapore had after all survived and had another good year, Singaporeans seem to get used to painless budgets and forgetting that this happy state of affairs has not been brought about by accident.

In fact, underpinning this happy state of affairs are three major long-term economic policies which the Government has embarked upon since early independence. The first of these is economic diversification. Since the 1960s the Government has consciously and deliberately decided to widen the economic base and venture into industrialization, tourism, provide a range of services in finance, transport, communications, services which our workforce can provide better than the others. Economic diversification gives us the strength to withstand the ups and downs of the world economy. It helps us to weather the storms, be they in the United States, Europe or Japan. It created job opportunities for us, for all Singaporeans, and most important, to minimize retrenchment in different sectors affected at various times, as jobs which became surplus in these sectors were absorbed by those which were having boom conditions. Economic diversification has contributed to overall improvement in the growth of our Gross Domestic Product and therefore increasing the size of our economic cake. It is a matter of maximizing our growth potentials and not only to either grow at the specific rate or to grow at a high rate.

Secondly, throughout the years, in response to world changes, the Government has also actively pursued a policy of economic upgrading and in the last several years a restructuring of the economic base. We have begun to swing away from labour-intensive to capital-intensive industries, from low skills to high technology industries. This economic transformation, including upgrading and restructuring, will get us away from protectionism in precisely those industries that we have been carrying in the 60's and 70's. It enables us to open new and more stable markets for our high technology products which make fuller use of the skills of our people. Most important, it makes the best use of our limited labour supply by providing employment which will optimize individual skills and upgrade their potentials in order to enjoy a higher income.

Thirdly, and this is an invisible process as opposed to economic diversification and economic upgrading, is the Government's relentless pursuit to inculcate a proper work attitude and the need for high productivity amongst our workforce to support the major economic strategies necessary because of the structural changes not only in Singapore but, more important, in the industrial world. The workers, as a consequence, have responded in full measure to the Government's policies, especially in the last three years when all of us had to go through a difficult period of adjustment in keeping with the wage correction policy outlined by the Minister in his Statement, It has also generated a full tripartite coordination amongst Government, employers and our workers, supported by the unions.

The question arises as to what would have happened if these policies had not been effected or that the ingredients were not present to ensure the success of these policies. The Singapore economy would have swung like a yo-yo together with the world. If the world recesses, we would also recess. If the world booms, we will boom together with the inflation. The long-term effect is that we will be priced out of the international market because of our limited labour supply and low skilled products with which we cannot fully compete with our neighbouring countries where human resources are more abundant. If our economic growth cannot be sustained, the economic cake will shrink and we will no longer be in the happy situation of talking about providing 4- or 5-room flats for our citizens. We would be hard pressed to build one-room flats. We can forget about social programmes on which so many Members of the House have been talking about. In short, we would have been in dire circumstances indeed.

In the event, Singapore succeeded because the Government has been able to adopt a far-sighted perspective or the prospects for Singapore, especially in being able to read danger signals way ahead of time. This has been backed up by an equally enthusiastic response from our people who have placed their trust and confidence in the Government in the hope that with the long-term policies that have been suggested for implementation, if they are a little more patient, in the end all Singaporeans will benefit. This trust and confidence in the PAP Government has been more than reciprocated by the PAP Government, as evidenced by the return of the PAP Government to Parliament ever since independence. Much more important also is the fact that both Government and the people are prepared to face difficult problems, unpleasant at times, painful at times, and that both Government and the people are flexible enough to change with the world-changing circumstances.

The lessons of the last 15 years have taught us that never should we assume that economic prosperity and, in its wake, social progress comes by accident, like "manna from heaven", as the Bible says, free for the asking. We should all bear in mind that the economic success and social advancement in Singapore has been brought about by deliberate, painstaking efforts in planning, in keeping people informed and in putting confidence in them in their ability to perform. It is a total sum game in which the Government and the people together determine for themselves the destiny that they hope one day they and their children will enjoy.

The future economic prospects in the 1980's, apart from those painted by the Minister in his Budget Statement, are all too plain for us to see. Those of us who read international newspapers will know that the world is on the brink of a severe recession and the situation is likely to deteriorate. Singapore, as usual, is not sheltered from this. But the policies that we have in the past would stand us in good stead. All we need is to make sure that the three basic ingredients that we have put into the enlarged economic cake will continue to be in ample supply. First, the ability of our Government leaders to read danger signs and prepare ourselves accordingly: Second, our people should continue to place their trust and confidence in the Government, something which they have done in the last 17 years, and to respond by puffing their shoulders to the wheel, to work hard and to improve their work attitude. And more important, the third ingredient, to be ready to accept short-term sacrifices in return for long-term gains for themselves and for their children. With these ingredients there is no question that our economic cake will get bigger and bigger and then all citizens will be able to take a bigger share in the fruits of their labour.

I would like to join all the PAP colleagues in giving my full support to the Minister for Trade and Industry for presenting his annual financial policy for the coming year. 6.08 p.m.

The Minister for Trade and Industry (Dr Tony Tan Keng Yam): Mr Deputy Speaker, Sir, I should, first of all, like to thank hon. Members for their generous compliments and for the interest which they have shown in the Budget. Judging from the numerous comments and suggestions which have been made in this House over the last two days, Backbenchers must have gone through the Budget with a fine tooth-comb.

Several Members have brought up points or questions which lie more properly within the province of particular Ministries. Such matters do not strictly belong to a debate on the financial policy of the Government and I shall deal with them only in so far as they impinge on Government's general policy. I hope that Members will raise these questions or comments again at the appropriate time in the Committee of Supply, when I am sure my colleagues in the Cabinet will be pleased to answer them in detail.

For convenience, I shall divide my answers into two parts. The first part will deal with the economic policy of the Government and related issues. The second will deal with the taxation policy of the Government.

The Member for Alexandra mentioned that some businessmen had expressed disappointment with the Budget because they had apparently expected more incentives or concessions to stimulate business, and he wondered if I had considered the views and suggestions, which were made to me during my pre-Budget discussions, to be, as he said, not very appropriate. In general, I found the discussions to be useful in that it enabled me and my officials to obtain direct feedback from the sectors concerned. Incidentally, to dispel any doubt on the part of the Member for Anson, I did not meet only with the Secretary-General of the NTUC. The NTUC delegation comprised union leaders and representatives who had direct contact with the workers in the factories and on the shopfloor. As might be expected, much of the discussion at these meetings did not relate specifically to tax changes but were concerned with the general business and social environment and issues which were of importance to each particular group.

Some suggestions, for example, reduction in corporate tax, had a venerable history. I am sure that they must have been put forward year after year to successive Ministers who have been in charge of the Budget. The difficulty, of course, is that if we reduce corporate tax we will have to finance Government expenditure by raising income tax which, I am sure, would be unpopular with Members and their constituents. And if we do not raise income tax, then Government can only obtain adequate revenue to finance its expenditure by pushing up property prices and thereby profiting from the high premium on Government land sales, as in the case in Hong Kong. Again, this has its economic disadvantages. On the whole I am of the opinion that our rate of corporate tax at 40% is reasonable and is not unduly onerous to business. The tax burden on companies in Singapore is among the lowest of the countries in this region. Where certain sectors of our economy require special assistance, we have a range of tax incentives and concessions, for example, accelerated depreciation, pioneer status, investment allowances, special concessionary rate of 10% for offshore income which reduce the tax burden on companies. These are sufficient for the time being.

Other suggestions brought up by the business groups involve highly technical matters, for example, problems relating to section 44 of the Income Tax Act which deals with resident companies and the use of tax credits to encourage repatriation of foreign income to Singapore. Such suggestions require very careful study to work out the economic consequences of any changes. However, I would assure the Member that these suggestions will not be simply put into cold storage but will be further studied and perhaps, at a suitable time, they will turn out to be very appropriate.

The problems of trade protectionism and the importance of increasing Singapore's trade were raised by the Member for Alexandra and the Member for Chong Boon. Their comments are indeed timely. With deepening recession in our traditional markets, trade protectionism will be one of the greatest dangers which will face Singapore in the 1980s as the developed countries seek to erect tariff walls and quotas around their own markets in a mistaken attempt to protect domestic jobs.

The Department of Trade presently provides export promotion services to local manufacturers and exporters. These services include the organization of trade fairs and trade missions to promote Singapore products in overseas markets. The Department also maintains a network of overseas trade offices in New York, Los Angeles, Japan, Rotterdam, and Jeddah to assist local manufacturers in obtaining more business contacts in these countries. However, due primarily to constraints in staff recruitment, the Department has not been able to carry out its export promotion services as vigorously as we would like.

The Member for Chong Boon has suggested that this is now the right time for us to undertake a bold initiative to embark on a new export drive. He has urged the Government to reassess the need for a high-powered trade promotion agency such as a Trade Development Board. He will I am sure be pleased to know that this matter has been under active consideration by my Ministry over the last several months and the Department of Trade has been discussing the setting up of a Trade Development Board with the various Chambers of Commerce and the Singapore Manufacturers Association. I hope that we will be able to come to a decision on this matter before the end of this year.

I am grateful to the Member for Alexandra for his pertinent comments on tourism in Singapore. Both the Singapore Tourist Promotion Board and my Ministry are aware of the problem of rising room rates and the rising cost of food and shopping in Singapore, As for hotel room rates, I believe that it is unwise for the Government to interfere and institute price controls. What we have done is to encourage and facilitate the construction of more hotels. By 1986, there will be an increase of more than 10,000 hotel rooms. Hotel room rates should begin to stabilize before long. Nevertheless, his suggestion that we should undertake a thorough study of our tourist sector is a good one. Although we know that shopping is one of our main attractions for tourists in Singapore, it will be necessary for STPB to keep track of the changing tastes and attitudes of the tourists who come to Singapore.

The Member for Chong Boon has spoken at length on the need to conserve energy because the present oil glut may not last very long. I am sure that on that point we are all in agreement with him.

The Public Utilities Board has recently set up an Energy Conservation Centre to advise consumers on energy conservation measures and to explain how to conduct energy audits and demonstrate efficient energy use. This centre is open to the public during normal working hours and is located in the PUB Building

In addition, the PUB has established an Energy Conservation Division to coordinate energy conservation efforts of both the public and the private sectors. Since its formation in December 1981 the engineers of this Division have visited and have carried out energy audits of hotels, shipyards and industries to advise on energy conservation measures and the implementation of a systematic energy management programme.

The PUB is also working very closely with trade and manufacturers' associations to promote energy conservation. The Energy Diagnosis Bus mentioned by the Member for Chong Boon and which is already implemented in Japan and Canada, works on the same principle as the assistance currently being provided by the engineers of the PUB. As Singapore is much smaller than Japan or Canada, the PUB will have to study whether such an approach is of value in Singapore.

The PUB is also continually striving to improve its operational efficiency and to measure its performance by comparing itself with other public utilities.

The PUB's generating efficiency has improved considerably over the last decade. In 1971, efficiency was 29.9%. In 1980, it has increased to 35.4%. Last year, efficiency rose to 35.7%. In comparing improvement in efficiency over the period 1971-1980, Singapore has improved by 5.5 percentage points, against 3.3% for Hong Kong and 0.2% for Japan in the period 1971-1979.

The significance of the efficiency improvement is best illustrated by looking at the cost of electricity. If the PUB had remained at an efficiency of only 29.9% in 1981 instead of 35.7%, the PUB would have to pay S$155 million more in fuel costs. Singapore's electricity system is monitored with the aid of computers. This enables the PUB to optimize its system operations in order to achieve better efficiency. In addition, power stations are being modified to enable the use of various grades of oil. This will give the PUB the flexibility to take advantage of price differences in the various grades of oil and, in so doing, to save on fuel costs.

Several Members, including the Member for West Coast and the Member for Geylang Serai, have raised queries on the operations of the Skills Development Fund. From the outset of its operations, the SDF has actively sought to reach out to companies, especially the small and medium-sized ones, through their trade and industry associations. The SDF Secretariat organizes regular talks to explain the various SDF assistance schemes to the members of these associations. The SDF is accessible to all companies and firms which are registered and operating in Singapore. They can be from any sector of the economy. Grants are based on the individual merits of each application.

There is no bias towards manufacturing or production-oriented training. In fact, companies in the non-manufacturing sector received 56% of the total training grants awarded as at the end of last year. There is also a separate technical committee for this sector to assist the SDF Council in the administration of the Fund.

While the multi-national corporations were quick to come forward with applications for grants in the initial stage, our local companies have now responded very well. Local companies received 65% of the $57 million awarded in training grants as at December 1981. They also make up 70% of the recipients of the interest grants for mechanization. The third grant scheme, the Development Consultancy Scheme, is solely to assist local companies in obtaining external expertise to help upgrade their business operations and their training plans.

Last October, the SDF Secretariat initiated a wide-ranging dialogue with the two Coffeeshop-Owners Associations on upgrading possibilities and financial support from the Fund. The two Associations now plan to commission a study on the impact of the increasing affluence of Singaporeans on their business and possible avenues for their adaptation and upgrading. I assure Members that the study will be generously funded by the SDF under its Development Consultancy Scheme.

While the SDF has now got on to a good footing after a somewhat slow start, there are still a number of areas of misunderstanding and shortcomings. Many employers still view the Fund as a refunding operation to simply reimburse the levy collections to them. The specific economic restructuring objective of the Fund is lost in the employers' criticisms at the accumulation of funds or the slow dispensation of grants.

The Member for Kebun Baru has commented on the unsatisfactory state of continuing training in Singapore. I believe the basic problem is that in Singapore there is insufficient senior management's commitment and involvement with staff training and development. Many chairmen and managing directors of companies simply delegate this task to their personnel managers or to their administrative managers without giving them the necessary commitment or support. More often than not, these well-meaning executives are not equipped with the knowledge or the expertise to carry out the total training function in their companies. As a result, they fall back on random selection of short courses for piecemeal training of some staff members. Aggravating the situation is the mushrooming of such short courses, many with short or more diluted training content. The SDF has nevertheless supported some of these courses when they meet special training needs of the employees or when they represent first-time training efforts of small employers. However, employers must be cautioned against over-reliance on such courses as they will not equip the employees with in-depth knowledge and skills for business upgrading or restructuring.

The training infrastructure in Singapore is weak. There is a limited availability of good training programmes and a shortage of experienced trainers and training administrators. Senior management executives are also not familiar with the key aspects of the training function, The SDF is making a special effort in meeting these areas of need. More training-the-trainer programmes and courses on staff training and development are being organized, and these will be generously funded.

The Member for Leng Kee and the Member for Whampoa have dwelt on the pros and cons of Singapore aiming for a high growth rate under present economic circumstances and their positions are somewhat different. I have discussed this subject at length when I spoke at the University in December last year and I shall not repeat the arguments in detail. It suffices for me to say that I am in the unusual and happy position of being able to agree with both Members.

To my mind, the crux of the issue is Productivity; whether we can through more capital investment (including the use of industrial robotics as mentioned by the Member for Kampong Kembangan), expanded manpower and skill upgrading programmes and whole-hearted cooperation between workers and management, achieve our targetted productivity growth of 6-8% per annum for this decade. If we can make the leap to sustain high productivity growth, then we will be able to grow at 8-10% per annum as advocated by the Member for Leng Kee but without incurring the problems of an overheated economy and increased inflationary pressures, as has been graphically described by the Member for Whampoa. If, on the other hand, our economic restructuring effort fails and we are reduced to obtaining economic growth through the production of more and more low-skilled, low value-added goods, then we will, of course, have to import more and more foreign labour with ultimately disastrous consequences for our economy and our society. The task that faces all of us, whether we are politicians, civil servants, private sector employers, or ordinary workers, is how to make ourselves more productive in our work. Then we will have a good rate of economic growth, low inflation and steadily decreasing reliance on foreign labour. This is the economic challenge that faces us in the 1980s.

As we are a small and open economy, we are vulnerable to imported inflation. However, I would like to assure the House that the Government is not sitting back and doing little to control inflation. In fact, the control of inflation is one of the Government's primary concerns.

Prices of goods and services are at present being monitored by a special Committee on Profiteering and Inflation, whose members are drawn from various Government departments and Ministries. The Committee meets regularly to monitor the inflationary situation. The Committee pays special attention to essential commodities such as rice, sugar and other food items. When the price of pork began to rise in the latter part of last year, the Committee decided that the most effective way to ease the shortage of supplies would be to allow imports of pigs from farms in Malaysia and Thailand which could be certified as disease-free. As a result of the action taken, the price of pork has since begun to decline to more tolerable levels.

The Committee will continue to keep a close watch on prices and our machinery is sufficiently effective for us to do this task without the necessity for me to have regular conversations with housewives. The primary aims of this Special Committee are to:

(a) seek cheaper sources of food and other essential commodities.

(b) prevent price-fixing and other restrictive trade practices by businesses and trade associations.

(c) develop a more effective consumer education programme.

Members will have observed that prices continued to go up until January this year because of Chinese New Year, but last month our Consumer Price Index showed its first decline. Rice, pork, fish, eggs, vegetables and sugar were cheaper in February than in January. I am confident hat this trend will continue and that our inflation rate for 1982 will be considerably lower than last year.

My colleague, the Minister for National Development, will be speaking in detail in the Committee of Supply on Government's land policy and its effect on property and construction prices, At this point I should just like to say that conditions in the first half of 1981 were somewhat unprecedented with a construction boom coinciding with a drying up of workers from our traditional sources and a temporary shortage of building materials as a result of curtailment of supplies from our regular overseas suppliers. The Ministry of National Development has taken steps to see that building materials will be in plentiful supply in Singapore this year, and with more mechanization in the construction industry plus expanded training programmes, we can look forward to more stable prices for flats and houses in the next few years.

The Member for Whampoa has commented on the effect of exchange rate and money supply policy on the inflation rate in Singapore. On the whole, the Singapore dollar appreciated by about 8.6% against a basket of currencies weighted according to the proportion of Singapore's retained imports. In 1981 the Singapore dollar appreciated 28% against the pound sterling, 17% against the Deutsche Mark, 13% against the HK$, 11% against the Yen and 3% against the Swiss Franc.

Also in 1981, the US$ remained fairly strong against most major currencies as a result of the high US interest rates. However, the Singapore dollar, in fact, strengthened even against the US$. In managing the exchange rate of the Singapore dollar, the Government has to take into account not only the impact of external monetary developments, especially large capital inflows on the liquidity of the domestic system and domestic inflation rates, but it also has to consider the adverse effects of the appreciation of the Singapore dollar on the competitive edge of Singapore's exports of goods and services. As a result, there was a lower growth in domestic money supply in 1981.

Money supply (M1) rose by 12% in 1981. The increase was on the low side when compared with the nominal GDP growth rate of 15.8% in 1981. There were some large capital inflows into Singapore during the last quarter of 1981. To stabilize the Singapore dollar exchange rate, more money and foreign exchange market intervention was conducted by the Monetary Authority of Singapore. This gave rise to the higher rate of increase of money supply during the period. However, this was corrected in January 1982 when money supply grew at a more normal annual rate of 13.5%.

About 23% of the increase in bank loans went to the building and construction industry. This was due to the continued expansion of that industry, which recorded a growth rate of 17% in 1981. However, it is somewhat a guess to say that loans given to professional and private individuals (16% of the overall increase) and financial institutions (20%) were mainly used for speculative purposes.

In an open economy like Singapore, the link between the increase in our money supply and our inflation rate is tenuous at best. Money supply, in fact, increased sharply in those years when we had the lowest inflation rates. For example: Inflation Percentage Increase Year Rate in Money Supply 1975 2.6 18.6 1976 -1.9 18.1 1977 3.2 10.5 1978 4.8 11.6 1979 4.0 13.1

Before I go on to other matters, I would just like to make one clarification regarding a point made by the Member for Whampoa. He has mentioned the sum of $1,720 million which he said was loaned to the Petrochemical Corporation of Singapore (PCS). I would just like to clarify that this sum of money included loans given as lines of credit to DBS, the Ship-Financing Scheme as well as the Capital Assistance Scheme for the Construction industry for FY 1982. The amount which was loaned to the PCS was actually $152 million.

Let me now deal with an Establishment matter before I pass on to the taxation policy of the Government. The Member for Khe Bong and the Member for Ang Mo Kio have raised the issue of the salary revision for Divisions II, III and IV officers consequent on the recent salary revision for the Administrative and Professional Services.

I should like to inform them that the Ministry of Finance has received proposals from the Amalgamated Union of Public Employees (AUPE) for a new Collective Agreement to cover Division IV officers. These included proposals to revise salary scales for Division IV. Most of the claims for the new Collective Agreement have been settled and the claims on revision of salaries for the Division IV grades are now under discussion. If the Ministry of Finance and the AUPE can come to agreement on these by the end of this month, the salary revisions for the Division IV grades could also be implemented on 1st April, 1982.

The Collective Agreement for Daily-Rated grades expired at the end of last year. The unions representing the Daily-Rated grades are expected to submit their claims very soon for a new Collective Agreement, including claims for wage revisions. Following receipt of these claims the negotiations can start. How soon the wage revisions for the Daily-Rated grades will be implemented depends really on how soon the unions can submit their claims and how soon the Ministry and the unions can come to agreement on these.

For Divisions II and III, as well as Division I, services, the salaries of which have yet to be revised, the Ministry of Finance expects that all these can be finalized by the end of June, barring no unexpected delays. Implementation will, however, depend on how soon agreement on the proposed revisions can be reached with the unions where the proposals are subject to claims by or negotiations or consultation with unions.

New salaries which have been settled with the trade unions for any scheme of service will be brought into operation without waiting for other schemes. But it will not be possible to backdate these new salaries to 1st April, 1982. A basic Establishment principle is involved, namely, that new terms and conditions of service should be effective either on the date of agreement and approval or on the first of the month following approval of those terms and conditions. To change this basic principle is to invite complications in future salary revisions.

Some Members have expressed reservations concerning the tax changes proposed in the Budget. Before I comment on the reasons behind these tax changes, I think that it will be useful to inform Members about the general thrust of Government's taxation policy. It is an unhappy but unfortunately inevitable aspect of modern life that death and taxes are the only two certainties in a person's life. Unless Government is going to bankrupt itself by issuing ever-increasing amounts of public debts to meet recurrent expenditure, taxes are a necessary source of revenue for Government to finance its outgoings.

Tax revenue constitutes some 73% of Government's total revenue. The tax revenues go to finance Government expenditure, to provide social and economic services as well as basic infrastructure and development projects. As the scope for Government services expands, the expenditure must also increase and the increased expenditure can only be covered either by broadening the tax base, increasing the rates of existing taxes, or introducing new taxes. By and large, I believe that the most equitable way is to expand the tax base rather than to increase the tax burden of existing taxpayers or, worse still, attempting to obtain more and more tax from a smaller and smaller base of taxpayers.

Income tax has always been the mainstay of our tax revenue forming just over half of total tax received. Corporate taxes contribute some 76% of the total income tax collection. There are two reasons for this: firstly, income tax for individuals has been reduced substantially over the last few years, and secondly, the success of our financial and economic policy has led to higher economic growth which has, in turn, resulted in higher collection of corporate income tax.

The structure of our income tax rates for individuals is still steeply progressive in nature. Those who earn more pay more, those who earn less pay less. And many people pay no tax at all. The number of individual taxpayers in the files of the Income Tax Department comprise only 50% of our workforce. For the Year of Assessment 1981, the Income Tax Department had, up to December 1981, completed assessments in respect of 445,000 individual taxpayers and the total income tax assessed was $587 million. There were 69,000 taxpayers, with a chargeable income of less than $1,000, paying the lowest marginal tax rate of 4%. The total tax collected from these 69,000 individuals, who represent 16% of the tax base, was $820,000 or 0.14% of the total tax collection. On the average, each of these individuals paid $12 in tax or $1 per month. In contrast, 12,300 taxpayers had a chargeable income of $50,000 or higher. Their marginal rate of tax was 34% or higher. These 12,300 taxpayers, who constitute 3% of our tax base, paid a total of $316 million in tax, or 54% of the total tax collection. On the average, each of these individuals paid $26,000 in tax. It is thus a complete distortion of the facts to imply that our income tax puts an unduly heavy burden on those who are not well-off.

We must, however, not swing to the other extreme and increase our tax rates to such an extent that individual incentive to strive and excel is extinguished. Our tax system must reward effort. Experience in a number of developed countries has shown that where personal income tax is set at exorbitant rates, workers' attitudes, initiative and incentive to work deteriorate and this contributes to the disintegration of the social and economic framework of those countries.

Now, I will say a few words about tax reliefs. These are not to defray the full cost or expenses of supporting a wife, children or aged parents. They are meant basically as an indication of the Government's inclination and policy decisions. I do not think it is right that we should regard the tax relief of $1,000 for a wife as an amount which we think is enough to support a wife.

There were also a number of tax suggestions which have been made by the Member for Kaki Bukit. He has proposed that contributions by RC members for community development projects should be tax deductible. The Member for Thomson has also suggested that hospital fees or expenses for an individual's aged parents should be tax deductible. As I have said, we have got to be careful about increasing the tax reliefs as otherwise Pandora's box will be opened and there will be no end to the number of reliefs which can be claimed.

The exemption for residential properties from estate duty of $600,000 or the full value of any one residential property (whichever is the higher) has drawn comment from a number of Members. Presumably they feel that this exemption will unduly benefit the rich and create a loophole through which Government may lose considerable revenue which could be obtained by levying estate duty on the estates of those who die leaving behind valuable homes worth say, $3 or $4 or $5 million. Let us consider some of the facts regarding the collection of estate duty. During the last few years there were on the average some 12,000 deaths each year and, roughly speaking, about 2,700 cases each year were referred to the Income Tax Department for the purpose of estimating the estate duty. Not all of these cases which were referred are liable to estate duty, and it is interesting to note that, notwithstanding the increasing affluence of our society, the total number of cases liable to estate duty has fallen steadily over the last few years, ranging from 754 in 1977 to 581 in 1980.

Now, the purpose of giving specific exemption for residential properties is to ensure that every family should own its own home and, if the breadwinner should unfortunately die, then the widow and her children should not have to sell the family house in order to pay estate duty. This is why the exemption limit has been increased over the last few years to keep pace with rising property prices. Based on the increased prices of property in 1981 when townhouses, semi-detached houses, even some flats, cost more than $600,000, we would have to raise the limit this year, say, to $800,000 or even to $1 million. This could have been made an annual concession by the Minister at each Budget debate. Looking further ahead, the question which we should ask ourselves is whether it is wise for Government to play a game of "catching up" with the property market and increase the exemption limit each time the property market goes up. On this basis, logically, if the property market should go down then the exemption limit should be decreased as well.

Furthermore, how much estate duty does Government actually receive in respect of estate duty on large estates where the main asset is an expensive residential property? The answer, perhaps not surprisingly, is insignificant. For the whole of 1981, for example, the Income Tax Department had only one case of an estate where the value of a single residential property exceeded $600,000 and even then the amount in excess of $600,000 was by a relatively small amount. Perhaps this may be because the unfortunate taxpayer happened to die at the wrong time of the year. I think the hard fact of life is that, whatever be the limit which is set, whether it is $600,000 or $800,000 any taxpayer who can afford to own a home of, say $2 or $3 million should be shrewd enough to work out either by himself, or with the help of his tax advisers, a suitable tax plan so that on his death the value of his house does not come within the ambit of estate duty. So since the Government is unlikely to lose what it will not get in the first place, why not go back to the original reason for the exemption for residential properties and make sure that the family of the deceased will not have to sell the family home in order to pay estate duty when the breadwinner dies? This is what we have ensured by the concession given in the Budget.

Some Members have also commented that the decision to exempt CPF contributions from income tax and estate duty will not be of much benefit to the ordinary worker. Now, unlike bank deposits or POSB deposits, contributions to the CPF are mandatory. It does not seem to me to be fair, first of all, to compel a person to contribute to the CPF and then to tax him on his contribution not only during his lifetime but also when he dies. The concession on CPF contributions is, therefore, to correct an inequity. I would assure the Member for Ang Mo Kio that before proposing this concession, I consulted the Income Tax Department and they have assured me that they are fully capable of drawing up rules to plug the type of loopholes which he has mentioned. Knowing the Income Tax Department, I am sure we can have full confidence in them. Life insurance premiums, on the other hand, are not mandatory and, I think, do not merit such generous treatment.

I now come to the comments made by the Member for Anson. In his speech he has claimed that the concept of p"caring society" was first put forward by his Party in 1976. Such a claim reminds me of the story of the rooster who noticed that whenever it crowed every morning, the sun would rise, and then proceeded to deduce that its crowing was the cause of the sun's daily rising.

The Member then went on to claim that, contrary to what was stated in the Budget Statement, the lower income groups did not enjoy any rise in real income and that he believed that, for many of them, real income actually declined last year. He based his claim by subtracting the inflation rate of 10% for foodstuffs and the additional CPF contribution of 4% from the rise of 14% increase in nominal income of our manufacturing sector workmen.

Mr Speaker, Sir, I am truly astonished that a person, who presents himself as an alternative leader of the government, does not know the most elementary principle of economics, i.e. that you cannot subtract oranges from apples and get lemons.

In the last three years, the NWC has recommended wage increases in the form of a fixed quantum plus a percentage. Last year it was $32 plus 6 to 10% and a further merit increment of 2%. The fixed quantum was intended precisely to benefit the lower income group. A $32 increase for someone earning $200 per month represents a 16% increase. Taking into account the additional percentage component of the recommended wage increase, the total wage increase for the lower income group was well over 20% for each of the last three years. A survey, conducted by the National Wages Council, shows that 90% of all firms, covering 96% of all employees in Singapore, had implemented the NWC first tier award.

So, if the Member is focusing on the lower income group, he should take this wage increase of 20% instead of the 14% which represents the average for all workers, the high income as well as the lower income group. 20% subtract 10% (for inflation taking the rate for foodstuffs) and 4% (for increased CPF contribution) which as pointed out by the Member for Punggol still belongs to the worker, still leaves at least 6% for real income growth for the lower income group.

I now turn to more serious matters. The Member for Anson has said that he will not support the Budget because the fruits of Singapore's economic growth have not been equitably shared with the workers. This is a grave allegation and would be an indictment against any government if it had any validity. It is thus all the more deplorable for the Member to seek to deceive this House and the general public by making a statement which, he must know, is totally untrue.

With your permission, Mr Deputy Speaker, Sir, may I request the Clerk of Parliament to distribute an Annex (Cols. 1027 - 1028) which contains some statistics showing how the common man has fared under the PAP Government in the 21 years since the PAP came to power. [Copies distributed to hon. Members]. Table 1 shows per capita GNP, private consumption and Government expenditure on social services for the years 1960, 1970 and 1981. The figures have all been adjusted for inflation at 1981 prices and are, therefore, comparable. Members will see that the per capita GNP has risen from $2,649 in 1960 to $10,801 in 1981, an increase of over four times in 21 years. During the same period private consumption per capita rose from $2,266 to $6,317, an increase of about three times. Annex - DATA ON STANDARD OF LIVING INDICATORS (Cols. 1027 - 1028)

Government expenditure on social services (i.e. health, education, welfare services, etc.) is a good indicator of the level of spending which Government has incurred to provide social benefits for our population. This has risen many-fold in the last two decades. The statistics show that per capita Government expenditure on social services rose from $191 in 1960 to $1,209 in 1981, an increase of over six times. These figures have been adjusted for inflation.

Domestic electricity consumption per capita is also a convenient indicator of the level of affluence in a society. In Singapore, this has risen from 109 KW-hour in 1960 to 447 KW-hour in 1981, again an increase of over four times. On a more mundane level, if we use as our measure the ability of Singaporeans to acquire consumer comforts like television sets and telephones, Table II shows that Singaporeans have benefited tremendously over the last 20 years. In 1963, when television was first introduced to Singapore, our population was 1,646,000 and there were 30,838 TV sets in the whole of Singapore, i.e. one TV set for every 53 Singaporeans. Although our population had grown to 2,443,000 by 1981, the number of television sets in Singapore had grown to such an extent that last year there was one TV set for every six Singaporeans. No wonder people no longer go to our community centres to watch television. They can now do so in the comfort of their own homes and, most likely, record on videotape their favourite Hongkong serials.

Similarly, in 1960, there was one telephone for every 27 Singaporeans whereas in 1981 the ratio was one telephone for every three Singaporeans. The provision of public transport facilities has also shown a similar improvement. In 1960, for every bus in Singapore there were 1,230 Singaporeans whereas in 1981 each bus served, on the average, 352 Singaporeans.

Perhaps the most dramatic indicator of the improvement in the standard of living of the ordinary man is shown in our public housing statistics. In 1960, 9% of our population were living in HDB flats. All were rented. None were owner-occupied. By 1981, 69% of our population were living in HDB flats, 25% were rented and 44% were owner-occupied.

In terms of actual number of houses and flats including the public and the private sectors, I have not been able to obtain comparable figures which go back as far as 1960, but I am able to give the House some figures which contrast the situation in 1970 as against 1981. Between 1970 and 1981, the number of bungalows, semi-detached and terrace houses increased from 39,676 to 43,538, an increase of just under 10%. The number of private flats increased from 10,008 to 16,321, an increase of about 63%. The number of HDB flats, however, increased from 120,138 to 337,198, an increase of some 180%. And we are going to build a further 290,000 flats for our citizens by the end of this decade. This is why for FY 1982 we have set aside a total of $2,253 million or one-third of the entire development budget for public housing.

Let me contrast our housing situation in Singapore against that of a fairly similar city state, i.e. Hong Kong. About 40% of the Hong Kong population is housed by the Hong Kong Housing Authority as compared with 70% of our population in Singapore being housed by the HDB. Most of the Hong Kong housing are on rental, and the rental charged by the Housing Authority varies. The older flats which were built earlier and which have communal toilets, not communal kitchens, are rented out at a low rental while the newer flats with its own toilets are rented out at a higher rental. The Hong Kong Housing Authority also has its own home-ownership scheme and sells its flats at its new towns at HK$480 per square foot. If we convert this into Singapore dollars, we will see that the Hong Kong government is selling flats at S$172 per square foot compared with the HDB selling its 3-room new generation flats at S$36 per square foot. The majority of the flats provided by the Hong Kong Housing Authority are of sizes between 11 to 20 square metres whereas the average HDB flat has a size of 70 square metres.

The Hong Kong government is building at a density of about 2,500 to 5,000 persons per hectare as against the HDB's density of 500 to 1,000 persons per hectare. Because of the smaller flats in Hong Kong, people are living in extremely crowded conditions. The average size of a Hong Kong flat is about 2.2 to 4 square metres per person as against 15 square metres per person in an HDB 3-room flat. Our HDB flat is three to six times bigger than the average Hong Kong flat.

Mr Deputy Speaker, Sir, these are the broad statistics which record what is so patently visible to everyone in Singapore but which the Member for Anson refuses to see. Because of this Government, Singapore today is a much better place for all Singaporeans to live.

Some hon. Members: Hear, hear!

Dr Tony Tan Keng Yam: The Singaporean today has a job, he has a roof over his head and he enjoys good social amenities. And his children, irrespective of whether he is well-to-do or poor, have equal opportunities in obtaining the highest education.

In a period of full employment and rising wages, the Member for Anson has conveniently set himself up as the champion of the rights of the workers. May I ask what cause the Member was championing during the period of the 1960s when there were riots in the streets and when there were high unemployment rates and when there were bleak economic prospects for the working man. Then the Member was conspicuous by his silence.

Mr Jeyaretnam: I was in Government service.

Dr Tony Tan Keng Yam: The Government's economic and taxation policy has always had, as its primary aim, the generation of wealth and then its distribution throughout the whole population in a fair and equitable manner. What the Government has not done is to follow the destructive policies suggested by the Member for Anson, i.e. to carve out in an arbitrary and ultimately self-defeating manner shares in an economic cake which is steadily becoming smaller. That is the road toward eventual collapse in the economy as can be seen in those countries which were unfortunate enough or foolish enough to follow the policies advocated by the Member for Anson.

Regrettably, Mr Deputy Speaker, Sir, the Member for Anson did not speak much on the Government's taxation policy yesterday as he had run out of time. However, he did speak at length on this subject during the debate on 3rd March on %he Income Tax (Amendment) Bill and I presume that his views have not changed. In that debate, dwelling on the burden of taxation on our workers, he suggested that instead of looking after the rich, the Government should raise personal reliefs so as to benefit the less well-to-do.

The raising, of personal reliefs is not desirable because it shrinks our tax net. If personal reliefs are increased, for example, by $1,000, then our tax base, which as I have indicated comprises only half of our workforce, would be reduced by a further 69,000 individuals. Each of these individuals would save, on the average, $12 in tax. Of course, $12 is $12 and a saving is a saving. But surely it is more important to these Singaporeans that they should get their HDB flats and that their children should have ample opportunities for education rather than that they should save $1 per month in tax?

I wonder if the Member is suggesting that Government should reduce its revenue by shrinking our tax base or drastically lowering tax rates to the level prevailing in Hong Kong. This will, as a matter of fact, help our businessmen, particularly those in the financial sector, to compete more effectively against their counterparts in Hong Kong. But then if he has read Milton Friedman, he will know that the social and housing benefits which are currently enjoyed by our population would have to be reduced to the same levels as in Hong Kong. Is this what the Member is seriously suggesting?

Or perhaps is he advocating that we should squeeze the rich to enhance Government revenue. The dire consequences of such a foolish policy can easily be seen in the case of countries like Britain. Suddenly, you find that capital will melt away like an ice cream on a hot day. Talent and expertise will emigrate and we shall all be sharing poverty instead of riches.

We should, in fact, try to ensure that as many persons as possible in Singapore, including the self-employed hawkers and taxi-drivers, come within the income tax net, even though the actual amount of tax they pay may only be nominal. Everyone will then be aware that, in this life, nothing is for free and the social and economic amenities which we enjoy have to be paid for.

In any case, Mr Deputy Speaker, Sir, the Member for Anson may not have realized that the raising of personal reliefs is regressive in nature, i.e. the tax savings are not distributed in an equitable manner. If we raise personal reliefs by, say, $1,000, then those who are paying the lowest rate of tax of 4%, would have a tax saving of at most $40 while those who are paying the highest tax rate of 45% would enjoy a tax saving of $450 - more than ten times that of those who are in the lowest tax bracket. This is surely an odd and convoluted way of achieving the Member's objective of penalizing the rich to benefit the poor.

Finally, Mr Deputy Speaker, Sir, I would like to thank all Members for their constructive suggestions and I assure them that they will be considered by my officials. [Applause]. 7.15 p.m.

Question put, "That Parliament approves the financial policy of the Government for the financial year 1st April, 1982 to 31st March, 1983."

Mr Jeyaretnam: Division, Sir.

Mr Deputy Speaker: Take a division.

The House divided: Ayes, 57; Noes, 1; Abstentions, 1 ; Absent, 16. Ayes Noes Abbas Abu Amin Jeyaretnam, J.B. Ahmad Mattar Ang Kok Peng Barker, E.W. Chai Chong Yii Chan Chee Seng Abstentions Chandra Das, S. Hwang Soo Jin Chau Sik Ting Bernard Chen Cheong Yuen Chee, Eric Chin Harn Tong Ch'ng Jit Koon Absent Chua Sian Chin A. Rahim Ishak Dhanabalan, S. Chiang Hai Ding Goh Chee Wee Chor Yeok Eng Goh Chok Tong Conceicao, J.F. Ho Kah Leong Fong Sip Chee Ho See Beng Goh Keng Swee Hon Sui Sen Howe Yoon Chong Jabbar, M.K.A. Jek Yeun Thong Jayakumar, S. Law Teik Soon Koh Lip Lin Lee Kuan Yew Lai Tha Chai Ong Pang Boon Lau Ping Sum Rajaratnam, S. Lee Chiaw Meng Tan, Augustine H.H. Lee Khoon Choy Toh Chin Chye Lee Yiok Seng Yeo Ning Hong Lee Yock Suan Yeoh Ghim Seng Ayes (cont) Liew Kok Pun Lim Boon Heng Lim Chee Onn Mansor Haji Sukaimi Ng Kah Ting Ong Teng Cheong Othman bin Haron Eusofe Ow Chin Hock Phua Bah Lee Rohan bin Kamis Saidi Haji Shariff Seah Mui Kok Selvadurai, P. Sia Kah Hui Sia Khoon Seong Sidek bin Saniff Tan Cheng Bock Tan Keng Yam, Tony Tan Soo Khoon Tang See Chim Tay Eng Soon Teh Cheang Wan Teo Chong Tee Wan Hussin Zoohri Ayes (cont) Wan Soon Bee Wong Kwei Cheong Yap Giau Cheng, Eugene Yeo Choo Kok Yeo Toon Chia

Resolved,

That Parliament approves the financial policy of the Government for the financial year 1st April, 1982 to 31st March, 1983.