STATUTORY CORPORATIONS (CONTRIBUTIONS TO CONSOLIDATED FUND) BILL

Order read for Second Reading.

The Minister of State for Finance (BG George Yong-Boon Yeo): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

In his 1987 Budget Statement, the Finance Minister announced Government's intention to require statutory boards to transfer accumulated funds which are in excess of their future development needs to the Consolidated Fund. In addition, statutory boards would be required to make annual contributions from their operating surpluses to Government revenue. These arrangements would ensure that statutory baords have adequate but not excessive funds to finance their operations and development plans.

A sum of $1.5 billion was accordingly transferred to the Consolidated Fund in FY87 from the accumulated reserves of the Urban Redevelopment Authority, the Port of Singapore Authority, the Telecommunications Authority of Singapore and the Civil Aviation Authority of Singapore. A further $311 million is expected to be credited to the Consolidated Fund in FY88 and this amount is pegged at 20% of the operating surpluses achieved by 12 self-funded statutory boards in FY87. In FY89, self-funded statutory boards are expected to contribute $380 million to Government revenue based on their projected FY88 surpluses.

Contributions by statutory boards to the Consolidated Fund have so far been made administratively. As such contributions are significant in magnitude and would be a permanent source of Government revenue, it is necessary that legislation be introduced vesting in the Minister for Finance authority to require statutory boards to make contributions from time to time to Government revenue. The Statutory Corporations (Contributions to Consolidated Fund) Bill, 1989 seeks to do this.

Clause 3(1)(a) of the Bill authorizes the Minister for Finance to require any speci- fied statutory board to pay into the Consolidated Fund the whole or part of the surplus of that statutory board in any financial year. This clause effectively provides a means of " taxing" the surpluses of statutory boards without formally invoking the normal income tax machinery. There is no advantage in using income tax procedures as this would be more time-consuming and costly as statutory boards would then have to prepare a separate set of accounts for tax purposes. However, as and when part or the whole of the operations of any statutory board is privatized or hived off into a company, then such a company would be subject to normal taxation.

Clause 3(1)(b) of the Bill authorizes the Minister for Finance to require any specified statutory board to pay into Government revenue the whole or part of the accumulated funds or reserves of surpluses of that statutory board which, in the Minister for Finance's opinion, is not required by the board for performing its functions and duties.

In assessing the amount of funds or reserves available for transfer to Government revenue, "trust" monies received by the Board are specifically excluded. This is stipulated in the definition of "funds" and "revenue" in clause 2 of the Bill.

Clause 3(2) regularizes all past contributions by statutory boards to the Consolidated Fund as having been made in accordance with the provisions of the Bill.

The statutory boards covered by the provisions of the Bill are specified in the Schedule to the Bill. All self-funded statutory boards other than the Central Provident Fund Board, Monetary Authority of Singapore, Board of Commissioners of Currency, Singapore and the Singapore Totalisator Board are subject to the provisions of this Bill. The CPF Board is excluded as its receipts are largely trust monies belonging to account holders. As for the Monetary Authority of Singapore, Currency Board and the Totalisator Board, existing legislation and administrative arrangements already allow for the transfer of their surplus funds to Government revenue.

Clause 4 of the Bill authorizes the Minister for Finance to amend the Schedule to the Bill from time to time through orders published in the Gazette.

Sir, I beg to move,

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [BG George Yong-Boon Yeo].

Bill considered in Committee; reported without amendment; read a Third time and passed.