ANNUAL BUDGET STATEMENT

Resumption of Motion.

Dr Tony Tan Keng Yam: Sir, I shall now continue.

The Singapore and Ngee Ann Polytechnics, VITB and industrial training centres and institutes operated jointly by EDB and industry have also expanded their outputs. In 1980 only 1,600 engineering technicians graduated from the Singapore and Ngee Ann Polytechnics, In 1985 this figure will rise to 3,290. As regards the VITB and joint industrial training centres, their output of skilled workers has risen from 8,119 in 1980 to 10,701 in 1985.

It is this systematic infusion of skilled and trained manpower, added to the pool of existing workers who are upgrading their skills through in-company training, which gives me confidence that our economy will continue to progress and that, in due course, we shall enter the ranks of the first league of industrialized nations.

Section II

Mr Speaker, Sir, I now turn to the FY 85 Budget.

The FY 85 Expenditure Budget emphasizes the building up of economic and social infrastructure. The allocation for infrastructural and economic development is increased. A larger provision is set aside for education and training to expand the pool of skilled, technical and professional manpower required for upgrading the economy. Substantial funds are also provided to the Housing and Development Board (HDB) for public housing.

Total Government spending in FY 85 is estimated to be $18.83 billion, about $2.35 billion or 14% higher than in FY 84. This rate of increase is lower than the average annual growth of 24% over the period FY 79-83 because of the completion of a number of major development projects and restraints on recurrent expenditure growth. More than 58% of the total outlay is for economic services, education, and public housing.

Provision for recurrent expenditure takes up 44% of the total budget. The allocation for recurrent expenditure for FY 85 is $8.36 billion, an increase of $875 million or 12% over FY 84. The increase is to cover higher manpower and operating costs as well as expansion of such services as education and manpower training. The rate of increase is, however, much lower than the average annual growth of 21% over the FY 79-83 period. The reduced growth in recurrent expenditure will make more funds available for development projects.

Of the total allocation for recurrent expenditure, Expenditure on Manpower accounts for $1.95 billion or 23%, Other Operating Expenditure for $2.77 billion or 33%, Grants, Subsidies and Other Transfers for $1.50 billion or 18%, and Public Debt Servicing for $2.14 billion or 26%.

Expenditure on Manpower is expected to go up by $289 million or 17%. A total of 766 permanent posts is provided for new or expanded areas of work, The additional manpower is mainly for new wards in existing hospitals, new schools, and extension of the Neighbourhood Police Post Scheme. The increase in the permanent establishment is partly offset by a decrease of 559 temporary and daily-rated posts, the majority of which are no longer required following the implementation of mechanization, automation, computerization and work reorganization schemes.

It would be appropriate at this point to refer to the 13th month Non-Pensionable Annual Allowance (NPAA). Members will recall that during the Budget debate last year, the Acting Minister for Labour, who was then the Minister of State (Finance), agreed to take a fresh look at the long-standing practice not to pay a pro-rated NPAA in the case of those who retire on or b&ore 31 December of the year or who die while in service before that day. My Ministry has completed the review and Members will be pleased to know that, with effect from today, a pro-rated NPAA will be paid to:

(i) officers who retire during the year on reaching the compulsory age limit, on medical grounds, on abolition of office or who are medically boarded out; and

(ii) the dependants of officers who die in harness during the year.

The rationale for extending the NPAA to these categories is that the officers leave Service due to circumstances beyond their control and, as such, they and their dependants should not be penalized. I wish to emphasize here that this is a one-time payment restricted to those who leave the Service during a particular year and is different from pensions which are recurrent.

Excluding Armed Forces expenditure, Other Operating Expenditure is expected to fall by $8 million. This is because of lower agency fees to the Urban Redevelopment Authority for managing the sale of state lands on behalf of Government, transfer of major purchases and replacement of equipment to the Development budget, and a smaller allocation for fees to banks and other agencies for management of Government assets.

The allocation for Grants, Subsidies and Other Transfers is increased by $172 million or 13% because of higher manpower and operating costs of statutory boards and other institutions dependent on Government financing, larger pension gratuities, and a further transfer to top up the Advance Accounts for housing, home renovation and vehicle loans to civil servants. The bulk of the increase is taken up by the tertiary and technical education institutions whose total enrolment is projected to grow by 30% over the next year.

The provision for Public Debt is increased by $286 million or 15% to meet interest payments and Sinking Fund contributions on domestic borrowings which have grown in volume.

The anticipated current revenue of $10.62 billion will be sufficient to meet the recurrent expenditure and leave a surplus of $2.26 billion for transfer to the Development Fund to help finance development projects.

Total development outlay for FY 85 is estimated to be $10.47 billion, an increase of $1.48 billion or 16% over the FY 84 allocation, Expenditure on public housing, education and economic services takes up $9.03 billion or more than 86% of the Development budget.

A sum of $5.0 billion or 47% of the budgeted Development expenditure is for the public housing programme.

The allocation for economic services is $3.55 billion or 34% of the Development outlay. Of this, $2.09 billion is for land reclamation, Changi Airport expansion, development of industrial estates, the mass rapid transit system, roads and other infrastructure. Loans and capital assistance grants totalling $1.46 billion will be extended to industrial and commercial enterprises.

The Development budget for education and manpower training is $480 million. This is for the school and junior college building programme, expansion of the National University of Singapore, Nanyang Technological Institute, Singapore and Ngee Ann Polytechnics as well as vocational and industrial training institutes.

Section III

Revenue

Consolidated Fund receipts on existing tax rates are expected to amount to $10.62 billion for the Financial Year 1st April 1985 to 31st March 1986. The revenue of $10.62 billion for FY 85 represents a marginal increase of 1.6% over the revised estimate of $10.45 billion for FY 84.

The main contributor to revenue is income tax, which accounts for about a third of total revenue. Because of anticipated poorer business conditions, income tax collections for FY 85 are expected to be $3.3 billion, some 8.2% lower than the revised estimate for FY 84. The decline in income tax collections will be offset by increased collections from property tax, customs and excise duties, interest and dividends and currency surplus.

For FY 85, income from the Development Fund is expected to amount to $3.74 billion, bringing total Government revenue to $14.36 billion. With budgeted recurrent and development expenditure for FY 85 of $18.83 billion, there will be a deficit of $4.47 billion which will be financed by borrowings and drawing down from the Development Fund.