ANNUAL BUDGET STATEMENT

Order read for Resumption of Debate on Question [2nd March 1984],

"That Parliament approves the financial policy of the Government for the financial year 1st April 1984 to 31st March 1985.". - [Minister for Finance and Minister for Trade and Industry].

Question again proposed.

Dr Lau Teik Soon (Serangoon Gardens): Mr Speaker, Sir, I rise to support the Motion standing in the name of the Minister for Finance and Minister for Trade and Industry.

I would like to congratulate him for his Budget Statement which has been well received by almost every sector in our society, particularly if I may say, members of the fair sex. I am quite confident that the Minister will be most welcome by the women in the various constituencies that he will be touring.

Sir, the Budget Statement reflects the Government's desire to have the corporate sector and private individuals play a more productive and efficient role in our economy. The various concessions and incen- tives to the companies and individuals are most welcomed. It is expected that, together with the Government Ministries, statutory boards and state enterprises, the companies and individuals will promote greater productivity and growth in our economy.

Mr Speaker, Sir, the approach of the Minister is a very realistic one. In my view, it characterizes the quality of the Government leadership: one that is prepared to make changes in accordance with different circumstances. These changes are also necessary to anticipate trends in the international economy. But they do so without sacrificing the basic objectives of the Government, that is, to provide better livelihood, environment, recreational and other facilities for the people.

Such an attitude contrasts sharply with those of others who suffer what may be called political schizophrenia. They see the reality of political life but they pretend that the problems do not exist. Worse, they live in a dream world, in a world of images and fantasies. They are those who continue to hold on to archaic and ancient rituals and who cannot adapt to changing circumstances. They are the political dinosaurs of today. Singaporeans should be well aware of such politicians who are iii-equipped to deal with the realities of our present world, not to mention those of the advancing technological age of the 21st century.

With regard to the tax changes for the individual, the point that has been made is that all these are aimed at giving incentives for our people to work harder and improve their educational levels so that they can make a better contribution to our economic growth and for them to have more income.

With regard to the enhanced child relief, I would like to ask the Minister whether his Ministry has already worked out the equivalent qualifications of those who do not have the five 'O' level passes and who will qualify for the enhanced child relief. Further, may I suggest that the Minister takes into account the earned income as another criterion for married women with children who can qualify for the enhanced child relief even though they do not have the five 'O' level passes. I think the criterion of earned income should be considered.

Another question I would like to ask the Minister is in regard to the CPF contributions. Already the employee is contributing 23% of his income to the CPF. As we understand it, there are likely to be increases but I wonder whether the Minister will consider holding down the contribution so that Singaporeans will have more take-home income for their various expenditures.

Mr Speaker, Sir, of late there has been a lot of talk about whether or not the new admission policy into primary one constitutes a violation of our Constitution. I will not contribute to that debate. Women are getting more and more incentives, the latest of which is the enhanced child relief. I think this is all wonderful for the fair sex. But what I would like to ask is whether all these incentives discriminate against the men. My colleagues support my contention that women are getting all these incentives and the men are not. Maybe the Minister should comment on this point.

Finally, Sir, I would like to reiterate my support for the motion standing in the name of the Minister. 3.35 pm

Mr Lim Boon Heng (Kebun Baru): Mr Speaker, Sir, it is difficult to fault the Minister for Finance and Trade and Industry for the Budget that he has presented. If at all there is a fault, it is that he has been extremely generous with tax rebates and incentives. It is tempting to ask: Why give away so much? To this, there is a ready answer: He gives away, in order that he may collect even more in the future. The incentives are intended to stimulate investment and reward effort. When these translate into growth, there will be more income to be taxed.

As we have done reasonably well in recent years, and real incomes have steadily increased, the rebate on personal income tax comes as a bonus, even if the Minister states that it is to mitigate the erosion of real incomes by inflation. Let us hope that this bonus will be used wisely. In our golden age we must not forget the perils that threatening economic storms posed to us. I am reminded of the sound advice that a Hebrew once gave to the Pharaoh in Ancient Egypt, as related in Genesis, Chapter 41. In the seven years of plenty, store up one-fifth of the yield of the land against the seven years of famine, so that the people will have food to eat, and the land may not perish through the famine. Even today I think that would be sound economic policy! So while the Minister has deemed it fit to give a little away, it is not too late for the taxpayer to save it up for a rainy day.

The Minister has pointed out the problem of serious labour shortage which can set a limit to our growth potential. This shortage will in part be due to the Government's policy to reduce our dependence on foreign workers.

It is therefore important that women, particularly the better educated, are encouraged to continue to work. In one broad sweep the Minister has not only enhanced the child relief but extended it to women with five 'O' levels. The Minister will be happy to note that upon publication of this particular incentive by the media, many working women straightaway ran a quick check through their 'O' level certificates to see if they qualified!

The Minister has another objective with this enhanced child relief for working women. It is to encourage the better educated women to have a second or a third child in order to correct the present lop-sided pattern of procreation in Singapore. He did not sound too hopeful on this score, and for good reason.

Universal education has presented women with equal opportunities. They compete successfully at work with their male counterparts. A career presents the women with a sense of usefulness, equality and fulfilment. But to pursue a career lands her in direct conflict with her natural instinct for motherhood. The result is a compromise, a rational compromise. Motherhood being satisfied with one child, she then devotes herself to pursuing a career. If working women are to be encouraged to bear more children, they will have to be offered a satisfactory solution to child care. A working woman is likely to have more children if she can depend on her parents or parents-in-law to help nurture the child, or if she can employ a reliable domestic servant, or if there are properly staffed child-care centres available.

We can, and must, continue to encourage the three-tier family. However, the results have been disappointing, and this is unlikely to make a difference in the immediate future.

Domestic servants are not easily available. Furthermore, working women have seen enough examples of their friends' children growing up speaking Sri Lankan English and singing Filipino songs to feel dissuaded.

Properly staffed child-care centres can be a solution. The problem is that today the staff-children ratio set by the Government is too high for child-care centres to be economical. There is a total lack of training facilities for staff for child-care centres.

The Finance Ministry should look more closely into this matter. Since the Minister has aroused the interest of the working women with five 'O' levels and above, he should follow up quickly by offering fiscal incentives for the setting up and operation of child-care centres. Why not offer a five-year tax holiday on the profits derived from the operation of child-care centres by private enterprise? Why not offer training grants for staff of child-care centres?

With the enhanced child relief, child-care centres will be more attractive propositions. Fiscal incentives will assure that they are speedily set up. When well-run and well-equipped child-care centres are available, the working women will be more inclined to follow her motherhood instincts.

Mr Speaker, Sir, while I support the Budget Statement, I do hope the Minister can consider this suggestion so that hopefully next year he can report to this House the success of this policy! 3.41 pm

Mr Hwang Soo Jin (Jalan Kayu): Mr Speaker, Sir, the Budget before the House is in every aspect a most satisfactory one. It is difficult for anyone to pick flaws with unless, of course, if you believe in deficit financing and fool that the Government should be even more generous in handing out money to the public. I had not originally wanted to speak on this occasion but when I read of Dr Winsemius' lament that there were not enough entrepreneurs amongst young Singaporeans, it touched a soft chord in my heart and I feel I should say a few words. What I am going to say can be construed as with vested interest on account of the fact that I am in business, but I can assure you that I am speaking not so much as a businessman but rather as a concerned citizen.

Sir, looking at the way our economy has progressed since independence, there is no disputing the fact that as a country we have done well. In fact, so well that instead of worrying about unemployment, a problem that affects and afflicts most countries both developed and developing, in recent years we are concerned about labour shortage and the long term impact of continued reliance upon foreign workers. This is an enviable position in the context of the world today. If we are complacent and content to continue to depend on the Government and the multi-nationals to provide the thrusts in our economic development (a feature in our economy that stood out so clearly as one listened to the Honourable Minister and as reflected by the official statistics released together with the Budget), we can very well tell ourselves that we have never had it so good. There is nothing to worry about. But our rapid economic development, as I see it, has reached a stage where we should perhaps look even more closely at things not only in quantitative but also qualitative terms. We should ask ourselves where is the development leading us to ultimately. Would we in time finish up as a nation of employees - employees of government and quasi-government bodies and multinationals and of traders, with no signifi- cant number of our own business leaders of standing in the private sector? Should we not try to create an environment conducive to the nurturing of entrepreneurial skills? We talk of procreation bias. It appears to me, Sir, there is also a pro-creation bias in the birth of entrepreneurs in our midst, in that we see an increasing number of foreign entrepreneurs and public sector entrepreneurs as against local private sector entrepreneurs. If we think that it is important to our economy in the long term for our own home-bred entrepreneurs to continue to emerge in the private sector, then I feel more will have to be done by the Government by way of incentives and organizational support.

Sir, hitherto EDB has been very successful in attracting foreign investors to come to Singapore. How EDB has gone about it and what it has achieved are matters of well-documented records that we all know well. I do not think it is necessary for me to elaborate. What I would like to suggest is that EDB should perhaps now address itself to the question of how it can help our own citizens to come forward and to become entrepreneurs in their own right. At present, for a person who aspires to become an entrepreneur, unless he has substantial private means of his own, it is difficult for him to realize his ambition even though he may have the right qualifications in terms of knowledge, training and skills. There is practically nowhere he can turn to for the necessary venture capital to start off. Consequently, as pointed out by Dr Winsemius, most of these individuals would rather remain as salaried employees.

I am not suggesting that EDB should help them by providing the venture capital at this stage (I know the answer will be that it is the taxpayers' money - we have to be careful). As a first step, what I think can be done would be for the EDB to encourage the submission of business plans from private individuals and to carry out independent evaluations of such plans. In the event that a plan is found to be feasible, assistance could be extended by finding suitable partners who have the means. At a later stage, if public response so justifies it, consideration should perhaps be given to the setting up of a venture capital fund. I know it is probably easier said than done but bearing in mind the excellent track record of the EDB, I would like to think that nothing is impossible with the EDB. In this connection, it is relevant to point out that the special tax treatment applicable to venture capital as announced in the Budget Statement will only benefit corporate bodies but not individuals.

Sir, another factor that has inhibited the growth in the number of entrepreneurs locally is attributable to the over-powering presence of Government in business. You see it everywhere - it is in banking, insurance, transportation, telecommunications, trading, printing, manufacturing and quarrying. You can almost say, "You name it the Government has it." I know it is not quite as bad as all that, but that is the impression formed in the minds of the public. When the Government first went into business, I believe it was influenced by the fact that there were a number of worthwhile commercial and industrial undertakings that the Government thought Singapore should try to develop. Since the private sector at that point of time lacked either the financial resources or the expertise, the Government had no alternative but to venture into these lines of business. So we went into steel mills, ship-building, ship-repairing and many others.

The developmental objective is one that few people will quarrel with and, in all fairness, in practically all cases the companies founded by the Government have done well and have spawned other related developments. All these companies are making good money. There is nothing wrong in making money except that, judging by the behaviour of some of these companies of late, one wonders whether they still have in mind the original objectives of Government in setting up these companies. And have these companies become simply, profit-motivated? Take the case of Keppel Shipyard. It was started to undertake ship-building and ship repairing, but today it is a conglomerate of over 100 companies involved in all sorts of activities, some of which have not even the remotest connections with ship-building and ship-repairing.

If our sole objective is to make money, there is absolutely nothing wrong in the approach, which is best described in Chinese as fei shui bu liu, wai ren tian ( ) meaning that fertile water should not be allowed to seep into other's paddy field. But if we bear in mind the need to stimulate private sector development and to encourage private entrepreneurship, we should realize that the approach that I have just described is depriving the private sector of valuable opportunities to develop or expand a whole host of supportive services. The "fertile water" concept has also prevented private sector companies from taking full advantage of Government's numerous developments to do more business, raise their levels of skills and thereby expanding to a more creditable size, able to venture out beyond the shores of Singapore.

As we all know, there is a tendency, whether wittingly or unwittingly, among the Government-owned companies and statutory boards, to scratch one another's back when it comes to doing business. It is fair to say that but for the strenuous efforts put in by the Government agencies, including the Government-owned companies, Singapore would be a lot poorer both in financial terms and in terms of trained human resources in a number of areas of economic activity, What has prompted my concern is the concern expressed by Dr Winsemius, and if we agree with him, we should perhaps begin to see in w.hat way the Government could over a period of time divest itself from some of the businesses presently undertaken by Government-owned companies so that our private sector will have a better chance to expand and to contribute more substantially to our economic growth. 3.53 pm

Dr Toh Chin Chye (Rochore): Mr Speaker, Sir, this time last year I warned the House that the Minister for Finance was presenting a strip-tease budget and sure enough the Minister bared it all by the end of last year. For taxpayers, it was quite a painful experience. Having done his act, we do not expect him to cover up this year because he has nothing more to hide. This is the reason why this year we welcome his Budget presentation.

The Minister for Finance deserves support for his objective of restraining increases in Government spending. In three years, from 1980 to 1984, Government expenditure increased by 96.3%. Development fund expenditure in the same period increased by 290%. Only 25.6% of the development expenditure for the financial year 84 is incurred directly by ministries while the remaining 74.4% are disbursed by loans and capital grants to statutory bodies and Government companies. The question which we would ask of the Minister is: how much of the development fund expenditure should come from taxes, direct and indirect? How much should come from public borrowings and how much income from investments? The increased taxation, whether direct or indirect, falls on the public, corporations, companies as well as individuals and have wide implications on their operating costs, profitability and cost of living of the individual.

Generating revenue for economic expansion or infrastructure development can be understood but when the Minister uses taxation policy as a regulatory measure to bring in more revenue, he confuses us. The outstanding example is the use of fiscal policy to control the motor car population last year. This year, revenue from locally refined petroleum products is expected to increase by 55.4%. Revenue from imported petroleum products will increase by 60.8%. Registration fees on motor vehicles will increase by 19.2% and road tax on motor vehicles by 25.9%. All in all, a revenUe of $1,205 million will be raised, not because of the sale of goods or services which one would expect of a company but this will be realized simply because of prohibition on consumption.

The additional cost of petrol is against the trend of lower oil prices. When Singapore raised its pump price by 20 cents per litre, Hong Kong lowered theirs the same week. Modern economies, I need not remind the House, revolve around petrol. We are no longer living in a country where goods are still transported by bullock carts and we go to work on bicycles as they do in the Maldives. Oil is the great determinant on prices of other goods. We learnt that lesson in 1973. Any increase in the retail price of petrol means an increase in the operating costs of businesses, big and small, from corporations to hawkers. Additional costs are eventually passed down the line to the last consumer. Nobody believes that the cost of living rose by 1.2% in 1983; that if the basket of goods and services were bought at $100 in December 1983, the same basket cost $101.20 in January 1984.

The Minister for Finance is also the Minister for Trade and Industry. They sleep in the same bed. One is dreaming, the other is having a nightmare. I cannot convince the Minister for Finance but housewives would like the Minister for Trade to know that prices are going up, goods and services cost more or they are getting less goods for their money. It is significant that between October of last year and January this year, the annualized rate of increase in the Consumer Price Index rose by 11.2%. The Minister is right that the lowering of oil prices and the strong Singapore dollar have made imported consumer goods cheaper. He is even more correct - he earns a 100% mark, when he concluded that our inflation was due to domestic factors. Yes, it is the Government's fiscal policies - that is the major domestic factor.

The Minister waxes optimistic over the tourist industry. But those who are in the tourist business do not share the same optimism as the Minister. There were 50% more conventions and exhibitions last year than in 1982. In spite of this, visitor arrivals fell by 4% and they stayed for a shorter time. Publicly-listed hotels have reported not only a drop in occupancy rates but also a decline in revenue, So I do not understand how the Ministry of Trade has calculated that earnings from tourism increased by 3%. Supply does not necessarily create demand. Increasing the number of hotel rooms does not necessarily bring in more tourists. And it is not low hotel rates alone that attract tourists. Hotel rates cannot go too low as otherwise hotels will go under.

It is worth repeating what I said last year - that Payroll Tax, Skills Development Fund and CPF payments are directly proportionate to wages, and if the Consumer Price Index goes up, there will be a demand for more wages. Operating costs will go up and they will be added to room rates. To this, add entertainment duty and a 3% cess proportionate to the amount spent. We were told last year that Payroll Tax was a relic we inherited from Malaysia. But I understand that Payroll Tax has been abolished in Malaysia. So we have to ask ourselves not whether we are working doubly hard or we should do so this year, but is there a special reason why tourists will want to absorb our costs, especially when the Singapore dollar is appreciating against currencies of those countries from which we draw our markets?

Last year I suggested to the Minister for Finance that there should be a report summing up the performance of statutory bodies and Government companies. What is their contribution to public revenue, particularly when these statutory bodies and companies are receiving either grants or loans out of public funds? I regret this has not been done.

If the Budget Book reports that the Monetary Authority of Singapore and the Currency Board pay dividends to the Consolidated Fund, should it also not publish what payments have been made by other statutory bodies and Government companies? Do they exist in isolation? Surely they must be accountable to the public, to the Minister for Finance who in turn should report it to the House. I would have dwelt longer on the role of Government companies, except that the Member for Jalan Kayu has made an excellent speech on this, when he pointed out the monopoly and the connections which statutory bodies and Government companies have with Authority. It is because of this that the private sector is feeling that it is being crowded out.

Taxpayers everywhere are grateful and kow-tow three times to the Minister for Finance for the little give-aways. We are no different. In fact, we are euphoric, absolutely so.

(1) The Minister for Finance has increased the exemption of estate duty up to $3 million in respect of residential houses; and

(2) he is giving a discount of 10% off income tax this year. It is the trend, Mr Speaker. Some hotels are advertising a 40% discount and some retail departments are selling off at half price.

This package will cost the Ministry approximately $96 million less. in inland revenue. But the Minister for Finance has to balance his losses. It is give and take, and it is the fundamental principle by which Finance Ministers make others happy and himself happy too.

So he takes back $107 million by increasing duties on cigarettes, tobacco, beer, stout and betting. Smoking, drinking and betting are bad habits, and they will stay. So the Minister is assured that the grumbling will not last long. After all, smokers, drinkers and bettors have been promised deductions in income tax this year. So should they not spend their extra disposable income in a little more smoking, drinking and betting?

Again, $89 million will be given back to income taxpayers in 1985 arising from the revised rates of tax. However, I would advise taxpayers not to spend that on credit. Wait till next year and find out how much they have to pay back.

Interest on savings in commercial banks is currently taxed under income. This does not encourage savings if the tax payable on chargeable income is 20% and above. For example, if interest on time deposit is 7.5%, in reality receipts after tax can be less than 6%. If the purpose of the Government is to encourage savings to help the capital market and to help Government borrowings, will the Minister consider the alternative of imposing a with-holding tax of, say, 10% on interest?

Two objectives are achieved by with-holding tax:

(1) The saver knows exactly his return on savings. He does not have to remember what his savings have earned in interest when filing his income tax return.

(2) The Inland Revenue Department is assured of its share because the bank or finance company will automatically deduct and pay to the Department.

There will be no suspicion by the Income Tax Department that taxpayers are evading income tax on money that has been squirrelled away. Hong Kong had, once upon a time, a with-holding tax but it has now abolished it.

On manpower development, none will contradict the idea that manpower development is a key factor among other factors in economic development. The Minister praises the increasing numbers of workers attending BEST classes where workers are taught English and Mathematics. So in addition he is providing increased tax relief for children whose mothers have acquired at least five 'O' levels.

I am concerned about the obsession with passing academic examinations, much of which will be forgotten in the real working world. In Singapore, a child's future is virtually decided at Primary 3 where streaming takes place, at PSLE and at 'O' level.

The Member for Ayer Rajah has eloquently raised this at Question time. It takes many types to make the world go round and I am not sure whether girls with five 'O' levels will make better mothers than others. It is arbitrary to set an achievement of five 'O' levels for additional child relief. It is as good as saying that children whose mothers have less than five 'O' levels are less acceptable by the State. It is too bad that they chose the wrong mothers.

There are mothers with two, three or four 'O' levels. Think of it. They just did not clear that little hurdle of five 'O' levels. So should we not send these mothers back to school in order that they can acquire the extra 'O' levels to make up to the magic figure of five?

Once upon a time the Adult Education Board was set up, so many years ago, in order to provide continuing education that the Minister talks about so eloquently. It could have conducted BEST classes or other classes to suit the new requirements of a changing economy. Workers may continue their education. But what has happened? The Adult Education Board has been abolished, closed down.

It would not have cost much to run the Adult Education Board. The Finance Minister is instead pouring $1,879 million into the Education Ministry when the numbers of school-going children are declining.

If we are to judge by 'O' level results, then the Ministry of Education is a singular failure.

Mr Jeyaretnam: Hear, hear.

Dr Toh Chin Chye: Less than 50% of students last year obtained five 'O' levels. Something must be very wrong indeed. I was astounded that through that the First Deputy Prime Minister and Minister of Education has come to the conclusion that graduate fathers are useless, do not deserve reliefs, but graduate mothers do. So from statistics obtained from the Ministry of Education, he has come to the important biological conclusion that IQ rests in the Y-chromosome and is not connected with the X-chromosome. I think they deserve the Nobel prize for this.

I have come to the conclusion that the Education Ministry is spending more and more on less and less. Either the purpose of education has gone off-beam or is distorted. Or children born in Singapore are becoming dullards and therefore more money for the Education Ministry is needed, or it appears that we have reached the point of diminishing returns.

The questions posed by the Member for Ayer Rajah were very pertinent indeed. I think it is right that the Ministry of Education should submit a statistical report to the House on the achievements of the Ministry since the revision of the education policy in 1979. We are not school principals who attend meetings organized by the Ministry of Education. At these meetings principals are told what to do. But we want a report simply stating what this policy has achieved. Is there any justification for pouring thousands of millions of dollars into education?

I support the Minister on two points that he made:

(1) His intention to cut down Government expenditure which has doubled from $5,170 million to $10,150 million in the last three years.

(2) To control the intrusion of Government agencies and companies into the private sector economy and let the private sector take the initiative. 4.10 pm

Mr Tan Soo Khoon (Alexandra): Mr Speaker, Sir, may I offer my heartiest congratulations to the Hon. Minister for his excellent Budget policy statement. Sir, in his Statement the Minister has said:

'The tourist trade was adversely affected by the 4% drop in the number of tourist arrivals, the first decline in 20 years.'

Sir, I remember that in the Budget debate in 1982, two years ago, I gave warnings of bad tidings for the tourist industry. I remember soon after that some friends of mine in the tourist industry laughed at what I said, and I could not blame them at that time because, in fact, in 1982 we had an all-time record high number of visitors, 2.95 million, almost 3 million visitors to Singapore. This represented an increase of 4.5% over the num- ber of visitors in 1981. However, last year, in 1983, the number of visitors dropped by almost 4% to 2.85 million. One cannot ignore the significance of the contribution of tourism to the Singapore economy. In fact, it has been estimated that out of every $10 earned by Singaporeans, $1 is derived from tourism and related sectors, such as hotels and shopping.

Sir, some of our neighbouring countries are today placing restrictions on their citizens who travel, owing to their own austerity drive. They have imposed exit taxes and these have seriously affected the arrivals of visitors to our country. A case in point is Indonesia which has imposed an exit tax on its citizens leaving its country. In 1982 the Indonesians were the second largest group of visitors to Singapore. 455,000 Indonesians visited our Island in that year. Last year, only 296,000 Indonesians visited Singapore, representing a decline of 35%.

We, therefore, cannot continue to ignore this decline in the number of visitors coming to Singapore. The consequences would be quite drastic for us. Let me just relate briefly the scenario of what might happen to two important sectors.

First, the hotel sector. In 1982 we had a total of slightly over 15,000 hotel rooms. One year ago, in reply to a Question from the hon. Member for Rochore, the Minister of State for National Development informed the House that from 1983 till 1987, a total of 18,965 more rooms will be added. In other words, by 1987, we can expect to have many more rooms than the number of rooms we already had in 1982.

Investments in the hotel industry is substantial. So far it is estimated that $8 billion have been invested in hotels and by 1987, this amount will double with the bulk going to the three major hotel projects currently going on in Raffles City, Marina Centre and the Rahardja Centre. Each of these would cost us at least $1 billion.

According to a report which appeared not long ago in the Far Eastern Economic Review, it has been estimated that the high development cost which includes the cost of the land - and may I add very expensive URA land - as well as the cost of construction, the interest payments and on the basis of only 50% occupancy rates, these three major hotels have to charge more than $400 per room per night when they are ready in 1987, just to break even. Now, the question here is, can these hotels find the guests to fill the rooms? Will there be sufficient growth in tourism to sustain the business? One can well imagine the task that our hoteliers have to undertake to fill the rooms not to mention the financial strains they would be placed under. And it is very important here that we ask ourselves now, Sir, what the Singapore Tourist Promotion Board is doing to ensure that there would be a continual increase in the rate of growth of the number of visitors coming to Singapore.

Sir, the other sector which has already been badly affected by the drop in the number of visitors is the retail trade sector. I do not wish to elaborate too much on this sector except to mention that all major departmental stores have reported steep declines in profits or financial losses for the last financial year. And they have all attributed their predicament to two factors: (a) the decline in the number of tourists coming last year and (b) the intense and more competition brought about by the opening of more and more departmental stores.

Sir, we have to ask ourselves one very important question if we are to do something to boost the tourist industry. We must ask ourselves: why do tourists come to our country? In fact, better still, Sir, let us ask ourselves: why do we become tourists? Why do we visit other countries? And there are two things which come to my mind when this question is posed. One, we go for sightseeing and we have to ask ourselves how much has Singapore really got to offer. The other point is that we visit a certain place because it is not too expensive to go there. And again we ask ourselves: is it not true that today Singapore has become too expensive a place? It is expensive because our hotels are expensive and because shopping, which in the past has attracted visitors, has also become an expensive affair because our shopping complexes built on very expensive URA land charge high rentals on our shopkeepers. That is why today, Sir, we read in the newspapers that even our shopkeepers want to go on strike and are making representations to developers to reduce rents.

Sir, an important lesson we can learn is from Hong Kong. When the value of the Hong Kong dollar dropped in October last year, tourists flocked there, recession or no recession, because prices were cheap. The lesson for us is that we have to find ways and means to continue to make Singapore an inexpensive place for tourists, because if we continue to be expensive the tourists who come here will go back and pass the word to their follow countrymen, and that would have an effect. I would therefore like to appeal to the Hon. Minister to make a real in-depth study of the whole tourist industry. Ad hoc measures to promote tourism would not do. I remember reading last year that the Singapore Tourist Promotion Board, as one of the few measures it is undertaking, decided to subsidize advertising expenditures of hotels which offered discounts on room rates. All I can say on that kind of scheme is that it has come about too little and too late. Tourism is one of our important money spinners and unless we do something quickly we might be unwittingly killing the goose that lays the golden egg. 4.26 pm

Mr J.B. Jeyaretnam (Anson): Mr Speaker, Sir, before I am challenged, may I declare my pecuniary interest before I speak on the Budget Statement, because I stand to gain by the income tax rebate that has been given by the Hon. Minister? Having said that, may I say that having regard to what the Leader of the House said at the last sitting -that this House is all PAP - I do not suppose anything that I do say here will have any effect or notice taken of. But be that as it may, Mr Speaker, Sir, I am here to speak on behalf of those in our society who have been neglected completely by the Minister in presenting his Government's policy for the year ahead. And, of course, I am referring to the working class who, may I say, have contributed in no small measure to the economic growth of Singapore. I have said this before and I say it again. But we find in this Budget Statement of the Minister not even a recognition of the part played by this sector of our society and therefore it is largely for them and for the less well-to-do people that I am here to speak. I am not here to speak on behalf of the wealthy, the captains of industry. I am sure they are well taken care of by the Hon. Minister and his Government.

Mr Speaker, Sir, I do not know whether this was deliberate or not but the Sunday Times in its front page carried a photograph of the dismal scene in Singapore after the deluge of rains we had. And it said, "After the Budget sunshine, the dismal gloom in Singapore." Sir, that may I say summed up beautifully what Singaporeans felt about the Budget, and I am talking about the majority of the Singaporeans. The press no doubt on the dictates of its masters tried to drum up a euphoria as soon as the Budget was presented. Everything was presented in glowing terms. And we of course heard this afternoon that it would be very difficult to fault the Budget Statement. I wonder if that is the reason why we have only set aside one day for the debate on the Budget Statement. It has been assumed that there will be nothing to criticize.

Mr Speaker, Sir, if I may attempt to criticize this Budget. This Budget is a budget that rewards the rich and capital. It is a budget designed in the main to put more money, as I said previously in other budget speeches, into the pockets of those who already have enough and to spare. It completely ignores the sector in our society who do not have enough money even to make their ends meet. Sure, Mr Speaker, Sir, there are a lot of give-aways. We have the give-aways for the graduate mothers with children and now extended to mothers with five 'O' levels. We have the give-aways in the form of the relief in estate duty for those who have amassed huge fortunes and who can afford to leave estates worth millions of dollars. We have give-aways for those who have invested in our economy. I am not complaining of that. Of course, it is necessary. You have got to encourage investment in our industry, in our economy. But the Government's financial policy, and this is a repetition of what I said previously, must address itself to all sectors. And I ask: what is there in this Budget that gives the average working man any joy? There is plenty of joy as I said for the rich, for the wealthy, for the well-to-do.

But what is the joy for the average working man in this Budget? The overage working man in the manufacturing sector is earning, according to the statistics in the Economic Survey, $156 per week. It works out to roughly about $600 to $700 per month. What joy does he have in this? Perhaps I must not completely ignore something, and that is, the Minister has thrown a little crumb to them. He says, "All right, I am giving cakes away to the rich, the well-to-do, the people who have got the money. Well, here is a little crumb for you. You take it." And he says, he has given a crumb of 10% rebate on the tax payable by these people. What does it work out to? The figures, given by the Minister himself ranged from about $10, the average reduction in tax, to about $48 for those who have a chargeable income of about $10,000. I suppose the workers must go down on their knees and thank the Hon. Minister for this little crumb that has been thrown into their basket or into their lap. But it makes a mockery. It is a mockery when you compare it with the reliefs that have been given to the others in our society. You see, on the other end of the scale in income tax, the reliefs that are given to those who are paying income tax at higher rates beyond 30%. We find that the highest relief comes to about $52,000. And with that, we have to contrast the $10 given to the worker. Why is it considered necessary to give to persons earning more than $750,000 a relief in the very significant sum of $52,000?

If the Minister wished to satisfy his conscience, could he not have considered increasing the personal relief of the individual, the relief for the wife?

I have spoken on this at length in last year's Budget Statement, Mr Speaker, Sir, and I do not wish to repeat it. All I want to say is this. That the personal reliefs that are now being accorded are less than what we were given in 1947, and that is nearly 40 years ago. I then referred in that Budget Statement to the reliefs that were given across the Causeway, and I pointed out that the reliefs there were more substantial than what were being given in Singapore. And the Minister in replying to my point on this said, "Oh, it doesn't really make very much difference because the rates are different. We start at a lower rate. We start at 4% whereas they start at 6%." He said, "You will find that the difference in the rates even out, and that we are not really taxing our workers earning below $7,000 to $8,000 anything more than what the Malaysian workers are paid." I am afraid, Mr Speaker, Sir, that the Minister was entirely wrong in that answer. I would not say that he has deliberately misled the House in making that reply. I would not want to accuse him of that. But I am afraid he has got his figures all wrong.

We produced a survey of this in our Party newspaper of May, 1983, and in case the Hon. Minister has not seen that, it is sent regularly to the PAP headquarters. We compared the position of a family in Singapore and in Malaysia, just a husband and wife, Mr Speaker, Sir, without any children, earning $8,000. What do we find? The table is there. We find that the husband and wife in Singapore earning $8,000 paid tax about five times that of a husband and wife in Malaysia earning the same amount. It is not only that, Mr Speaker, Sir, but a husband and wife in Singapore earning $8,000 a year had a net income of only $6,160 after his CPF deduction, whereas a husband and wife in Malaysia had a not income of $7,280. Clearly, the family in Malaysia is better off than the family in Singapore. Again, a husband and wife earning $7,000 in Singapore will pay tax of $55.60 on their income but the same family in Malaysia will not pay any tax. Mr Speaker, Sir, may I give you the figures for a family of husband and wife earning $8,000? The tax in Singapore at 4% works out to $86.40, after giving the reliefs that they are entitled to. And the Malaysian tax works out to $16.80. You will find that the Singapore family is paying five times the tax that the Malaysian husband and wife are paying.

I ask the Minister why was it not possible to consider increasing the reliefs, raising the threshold at which the incidence of tax begins to fall? Would there have been a great loss to revenue if that was done? The Minister says the PAP philosophy is that tax must be collected from as great a number as possible. "The tax base", he says, "should be as wide as possible because we do not want anyone in our society to fool that the Government will provide services for free. They must know that they have to pay for the services." But may I ask the Minister: what services are being provided free by the Government here? Mr Speaker, Sir, I was asked a question recently by somebody in my constituency. He says, "Mr Jeyaretnam, why are we paying income tax in Singapore? What benefits are we getting from our payment of income tax?" Because for every service that is provided by the Government there is a charge - I do not say the total charge but there is a charge for it. The patient goes into hospital, he has to pay. And we know that the charge for Class C rates has been raised quite considerably. To educate your children, there is a charge. I know the myth about free primary education in Singapore but parents are paying every month. Every parent knows this. So what is being provided free? There is nothing that is being provided free. So I do not understand the Minister's statement that every one must pay income tax because they must not be allowed to get away with the idea that Government will provide services free. Our citizens have never been allowed to forget by this Government that everything has to be counted in terms of money; that there is no question of humanitarian needs, compassion, but everything must be calculated in cold, hard money.

Mr Speaker, Sir, may I continue. The PAP philosophy - and we hear this often, it is dinned into our citizens' ears, I hear this in the House - is that there should be no subsidy. Subsidies are bad. It encourages people to be slothful, to not work. It encourages indolence. The PAP philosophy is that there should be no subsidy and that only hard work should be rewarded. May I ask the Minister seriously: what is the enhanced child relief if it is not a subsidy? Is that not a subsidy? You say that you need to subsidize these graduate mothers by giving them relief from income tax so that they may bring up their children. If that is not a subsidy, I do not know what is. So, Mr Speaker, Sir, what do we make of the PAP's philosophy that there should be no subsidy? Is it not really that the Party adopts double standards? What you are really saying is, "Yes, we believe in subsidy for the rich. We believe in subsidy for the wealthy but we don't believe in any subsidy for the working man. He will have to work." That is the son of double standard. That is talking with a forked tongue that we are accustomed to from this Government, Mr Speaker, Sir.

Then about rewarding hard work. Well, I agree you must reward hard work but how have you rewarded the workers for the hard work that they have contributed? How does the estate duty remission square with your philosophy of only rewarding hard work? Mr Speaker, Sir, I am all for simplifying the estate duty. But what I did not expect the Minister to do is to give these massive sums back. We find that in an estate of just over $5 million, the tax relief in estate duty comes up to nearly $889,000. Mr Speaker, Sir, is this relief a reward for hard work? BUt who will benefit by this relief? It is the descendants of the man who has worked hard. But is it rewarding them, or is it encouraging them if you give it away to them without taxing adequately the inheritance that they are receiving from the labours of their father or grandfather? I see that the celebrated Dr Winsemius, to whom reference has been made already a number of times in this House, has said, "Money has to be earned." How have these persons who benefit from huge sums left to them earned the inheritance? So I ask again, how do you square your philosophy of rewarding only hard work with this massive relief in estate duty for the big estates? I can well understand and I think there is a need to give relief in the case of small estates, the families who have worked hard, who own a home, a family home. I can very well see that, and they should get relief. But at the same time, what is the justification for cuffing down so substantially the estate duty on huge estates that have been left?

Mr Speaker, Sir, so I say the Budget is contradictory to this philosophy of the PAP. Would the Minister say whether he does not consider that his proposals in the Budget of these give-aways really run counter to the PAP philosophy or not?

May I move on, Mr Speaker, Sir, to the first part of the Minister's Statement in glowing terms about our economy. As I said, the Minister has delivered a shining panegyric of his Government's achievements during 1983. We have been told that our economy is in robust health. May I, Mr Speaker, Sir, question one claim that is made in this Statement and which appears in the Economic Survey of Singapore report as well and, that is, the question on productivity which, of course, we have been told over and over again that it is very vital. It is dinned into our people's heads from morning to night over the television, press, sides of buses and taxis. Now we are told that last year has been a shining success. We are told that productivity in the manufacturing sector has risen by some 8.8% during 1983 over the 1982 figure. I would like to know, Mr Speaker, Sir, and if the Minister will clarify this in his reply, how does the Statistics Department make its calculations, because there is no explanation accompanying the table showing how the figure was arrived at.

Mr Speaker, Sir, there are, I understand, two ways of calculating the growth rate of productivity. One way is by using the table which appears in the Economic Survey of Singapore at cols. 703-4. In cols. 703-4 of the Economic Survey, we find details of output, employment, remuneration, establishment, value added and exports of the Manufacturing sector. We do not know whether the prices are current prices or whether they are prices of a previous year. If he takes the figure for the value added and divide this by the number of workers, we get a surprisingly different story from the Government's claim of 8.8%. Value added per worker at current prices peaked in 1981 at $34,420. That is by this method, Mr Speaker, Sir. You divide the value added by the number of workers. In 1981 it was $34,420. By 1983, it had declined to $33,437. This would seem to give the lie to the claim that productivity in the manufacturing sector has been rising. If you work it that way, you find that productivity has indeed fallen over 1982 by about 1.4%.

There is but another way of calculating productivity and I am sure the Minister will acquaint the House of that. I understand, however, that the more accepted method now of calculating productivity is the method that I have outlined. That is a more popular method. But whatever it is, is it not incumbent on whoever produces these statistics and makes the claim to explain how they have arrived at this figure? Because if there are two ways of calculating this and they prefer to choose one method to show the figure that promotes their case or justifies what they have done, is it not incumbent on them to explain that there is yet another method but that they prefer their method of showing how productivity has risen?

Mr Speaker, Sir, I understand it is made worse if you take the 1968 prices. I do not want to spend too much time over this because I have a number of other things to speak on and I shall soon be told that my time is up. But it is important that when you present an economic survey for a year or so, you show how you arrive at your figures so that people may understand them.

But before I leave that subject, may I also mention in passing about the growth of the GDP. Again, claim has been made about the remarkable growth in GDP. What I want to ask the Minister - this is in passing - is how much of the growth in the GDP is attributed to foreign workers and foreign employees in Singapore, and how much of it goes to the indigenous workers and people working in Singapore. I am told that if you do attempt an examination, it will be very revealing. So would the Minister perhaps give us an answer to that as well when he replies? I am sure the Minister would perhaps say that whatever I have said does not need any reply. I would ask him not to hide behind that but to try and reply to this. That is one way of dealing with a matter. If you cannot answer, you say, "i do not think he needs a reply." And everybody thinks it is very clever.

If I may now turn to the objectives in the 1984 Budget which are given in Section 11, Mr Speaker, Sir. It says:

"The FY 1984 Budget is accordingly directed towards three objectives:

(i) restraining the increase in Government spending;

(ii) encouraging greater efficiency and productivity in companies; and

(iii) rewarding individual enterprise and hard work."

If I may take the first objective - restraining the increase in Government spending. I say amen to that because I have mentioned before, and I see that the Member for Rochore has mentioned it - the increase in Government spending. I asked sometime ago whether a commission could be appointed to examine the Government expenditure on manpower to see whether any economies could be effected. I notice that our expenditure on manpower is going up by another 6% in the sum of $102 million. Perhaps could the Minister explain how his Government proposes to restrain increase in Government spending, and what Government spending is he proposing to restrain? What measures do the Government have in mind for restraining the increase in Government spending?

The other objectives are "encouraging greater efficiency and productivity in companies and rewarding individual enterprise and hard work." He says in page 31 in Section I of his Budget speech that a fundamental requirement is better pay for better work, and of course no one could quarrel with that, He says:

"One of the fundamental requirements for success in our economic restructuring is to ensure that better work is rewarded with better pay."

And as I said, no one could quarrel with that and it is only right that you should reward hard work, better work, with adequate pay. The Minister goes on to say that his Government had "started last year to move away from the tripartite collective wage negotiations conducted at the national level and instead to promote union-employer wage bargaining at the individual company level." Well, it is all very good on paper, Mr Speaker, Sir. But if you are going to promote union-employer wage bargaining, you have got to give some clout to the unions. I spoke sometime ago when the Trade Unions (Amendment) Bill was passed and I said then - and I say it again - that our trade unions in Singapore are completely powerless. They are at the mercy of the Government and the employers. So how are they, the company unions, going to promote wage bargaining? I refer to the amendments that were made to the Industrial Relations Act by this Government and to the amendments made to the Employment Act which took away the powers of the trade unions to negotiate with the employers. Will the Minister assure the House that some of these powers will now be restored to the unions so that they may have some power to negotiate with the employers? However, after saying this, he brings in a word of caution. He says; "It will be dangerous to rush the process." Well, he says it in one breath and in the next breath says, "We are going to promote this, but we must be careful." Would he tell us exactly how he intends to promote the process or his Government intends to promote the process?

Mr Speaker, Sir, again I am sorry to repeat or refer to what I have said earlier. In previous Budget Statements, I said that it was time that this Government moved on in the area of employer/employee relations and not cling on to archaic ideas. I heard a Member speak about politicians with archaic ideas. It seems to me that if anybody has got archaic ideas, it is this Government. I said, "What about the Government moving on to give the workers a share in the company, equity sharing and power sharing, so that they have a stake in the companies that they work for?" If you give them a stake, if they have a share in the profits that are earned by the company, then you will find that they will turn out better work. It is no good preaching to them. No amount of preaching is going to do that. It has got to be something positive given to them so that they can respond to it. Is it not time, Mr Speaker, Sir, the Government thought of a scheme linking workers' pay directly to the productivity and profitability of the enterprises for which they work? This could be dons by linking yearly bonuses to a fixed percentage of total current cost profits as defined by standard accounting conventions. It should also be possible for workers to participate directly in the ownership of the companies they work for. This could be done through the distribution of bonuses for long serving employees in the form of equity. Tax incentives could be given to private sector companies to encourage them to do this. In addition, part of the employers' CPF contribution might take the form of equity in the companies themselves.

It would be best if public sector enterprises took a lead in this direction. We would hope eventually to see the employees of the public sector companies owning the majority of ,shares with the result that they share directly in the need for risk-taking and improvements in effi- ciency which at present involves only management. The Minister must be aware that it is standard practice in the advanced capitalist countries, and we favour the capitalistic economy, for senior management to receive part of their remuneration in the form of shares in the company they work for. Why should this not be extended to the workers?

I have tried to show, Sir, that despite the claim made by the Minister, productivity has indeed fallen over the last two years. It certainly has if you calculate productivity by the method that I have spelt out. So it becomes of increasing urgent importance that now new steps be explored to increase productivity. It is no good just talking about company welfarism. You cannot just leave it to the companies. Workers are not recipients of charity. It is time we rid ourselves of that idea, that workers are only recipients of charity. We have got to accept that workers have a significant contribution to make and that they should be given full rein to play their part in increasing productivity.

Mr Speaker, Sir, it is timely that there was a report filed by the US News and World Report about what is happening in America, the capitalist country and what do you find there. I read from this report filed by the US News and World Report and carried by the Straits Times. You will find that a small but growing number of unions now are in positions inside corporations to question and influence decisions about product development, capital investments, plant closings, compensation and corporate leadership. Through seats on Boards of Directors, labour leaders are gaining access to financial information and plans for expansion, subsidiaries and affiliates.

The President of the American Arbitration Association, Mr Robed Coulson, is quoted. He says, I do not think it needed saying, but he says it:

'it is a recognition that workers have an interest in seeing their employers prosper and that in many cases management decisions are better if the experience and knowledge of the workers are listened to and tested against the real world of the assembly line.'

Then, if I may quote again from this report what was said by the Labour economist, Audrey Freedman, of the Conference Board. She says:

'in sharing information about business as well as profits and stock, employees become more than mere wage takers.'

That is important. We must make our workers feel that they are more than just wage takers. She goes on to say:

'They become engaged with the place they work. They feel part of the enterprise and put forward their best effort. That can only be for the better.'

Mr Speaker, Sir, it as somebody said, and it has been said again and again that our only resource are our people, and if you look at it, the only resource are our workers, we have got to see that they are rewarded, not unfairly, not that they should take the major portion of the cake or the profits, but they be rewarded equitably for the work that they have put in. I think it is time that we moved away from the idea that the workers are there simply to work, that they have no share in decision-making in the companies, just as we are saying that our people have a share in the decision-making of the Government. And that is our policy, that every citizen must share in the decision-making of the Government. Workers must share in the decision-making of the companies and must not be excluded. If you do that, you will find that productivity will rise.

Mr Speaker, Sir, this year we are told that we are going to celebrate National Day from June to September and we are told it is because it is the 25th year of our nationhood. Mr Speaker, Sir, may I say that (I do not want to spend too much time on this) it is not the 25th year of our nationhood. We only became a nation in 1965. But that is in passing. I will deal with that later. But it is obvious why we are celebrating this National Day from June to September. We are celebrating 25 years of this rule, the domination of Singapore by one Party. That is abundantly plain.

Mr Speaker: Mr Jeyaretnam, has that been stated by the Minister for Finance in his Statement?

Mr Jeyaretnam: Sorry, Sir?

Mr Speaker: Is what you were saying just now mentioned in the Budget Statement? I thought we are debating on the Budget Statement?

Mr Jeyaretnam: No. I am talking about how the Government has cared for and looked after its responsibilities to its citizens and that is in the Budget Statement. I want to conclude very shortly.

As I stated, you have a duty not just to look after the captains of industry - of course, they need to be - but you also have to look after the others. And labour has a part. Then there are also the less well-to-do, the handicapped, the maimed, the underprivileged people. What have you done for them in this Budget? What provision has been made in this Budget to make life easier for them?

May I tell the Minister and the Government that in the ultimate analysis, you will only be remembered by how well you have taken care of the citizens who needed to be taken care of. You are not going to be remembered because you have got a futuristic airport in Singapore or that you have got wonderful shopping complexes sprouting all over the place. You will be remembered, when history comes to be written, how you took care of the people who needed to be taken care of. I say that you have failed completely in that respect.

This Budget Statement, as I have said at the beginning when I started, takes no account whatsoever of the needs of those who are earning below $10,000 a year, and quite a lot of them are earning much less than that. We have completely neglected them. The Budget does not address itself to them and they form the majority of the people in Singapore. It is your rich, the wealthy, that you are looking after. In that respect you have dismally failed, and for that reason I shall vote against this Budget Statement.

Mr Speaker: You still have another 10 minutes to go. Have you finished?

Mr Jeyaretnam: Yes.

Mr Speaker: Oh, good. I propose to take the Suspension now. I suspend the Sitting and will take the Chair again at 5.45 pm.

Sitting accordingly suspended at 5.16 pm until 5.45 pm. Sitting resumed at 5.45 pm.