SKILLS DEVELOPMENT FUND (Particulars)

Dr Toh Chin Chye asked the Minister for Finance, up to 31st December, 1982, (a) how much was collected for the Skills Development Fund; and (b) how much has been disbursed for the purpose of the fund and to which organizations and companies.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, as at 31st December, 1982, a total amount of S$313.8 million was collected for the Skills Development Fund.

A total of S$27.5 million has been disbursed as at 31st December, 1982, under the three grant schemes of the Fund. In the private sector, 1,288 companies received S$18.8 million in training grants, 96 received S$2.0 million in interest grants for mechanization and 23 received S$0.6 million in development consultancy grants. Government ministries and statutory boards received S$6.0 million in training grants and S$O.1 million in development consultancy grants.

The following organizations in the private sector have benefitted from disbursements from the Fund-- Sectors No. of Percentage Companies Manufacturing 614 43.6% Banking and Insurance 316 22.5% Commerce 234 16.6% Transportation 94 6.7% Others 149 10.6% 1,407 100%

As at 31st December, 1982, a further sum of S$102.4 million remained to be paid under the three schemes. Of this sum, S$78.9 million is payable under the Training Grant Scheme, S$19.8 million under the Interest Grants for Mechanization Scheme and S$3.7 million under the Development Consultancy Scheme.

Dr Toh Chin Chye (Rochore): Mr Speaker, Sir, the Act provides for equipment subsidies and the Minister answered just now that subsidies were given in order to permit some companies to mechanize. I would like to question why should one company's contribution be used to subsidize the capital assets of another company?

Mr Hon Sui Sen: Sir, I think the purpose of the Skills Development Fund is to improve skills, and the increase in skills and in productivity is usually accompanied by an improvement in methods which include mechanization. In order that we can improve skills in procedures which require mechanization, we have sometimes to encourage companies to mechanize and the amounts which have been given have not been very considerable and are amply justified.

Dr Toh Chin Chye: Mr Speaker, Sir, may I draw the attention of the Minister for Finance that payroll tax has increased by 216% over a period of five years. Contributions to the CPF have increased by 289% in five years. I dread how fast the Skills Development tax will add up to the cost of labour. It is inevitable that in the payment of these levies altogether the cost of labour would be pushed upwards, and this will make exports less competitive.

Will the Minister agree that the Skills Development levy does not seem to completely fulfil the original intention and whether he will consider suspending the Skills Development tax until such period when the Singapore economy is on the boom again?

Mr Hon Sui Sen: Sir, I do not want to go into the cost of labour and its effect on the economy. This is given in statistics in the Economic Survey and can be looked at.

Payroll tax, as far as I am concerned, is not related to the Skills Development Fund. It is a revenue tax which was imposed first during the Malaysian period and which I found very convenient for financing of other Singapore Government projects. So I do not include payroll tax in the cost of labour. It may be considered as a revenue item.

The Skills Development Fund has been set up specially to increase the productivity of workers, and the amounts which have been disbursed are increasing and will eventually increase to meet the contributions which are being made by the companies. I certainly hope this will come about very soon and I hope that productivity will increase accordingly.

Dr Toh Chin Chye: Mr Speaker, Sir, is the Minister aware that in spite of the Skills Development tax and in spite of the efforts of the Productivity Board in organizing courses, the productivity of Singapore labour has fallen down to 2.2%?

Mr Hon Sui Sen: Again, Mr Speaker, Sir, I think he had better study the Economic Survey for he will find that the reason why productivity has fallen is due perhaps to the present economic situation where a lot of workers are retained, even on short-time, and therefore the figures on productivity are affected by the fact that a lot of additional labour is retained. I do not think this is related so much to the Skills Development Fund. It would be very surprising if all the training that we have done under the Skills Development Fund that this has been the cause of productivity falling.