ANNUAL BUDGET STATEMENT

[Mr Speaker in the Chair]

Debate resumed.

Mr Choo Wee Khiang (Marine Parade GRC): ( In Mandarin): Mr Speaker, Sir, the Budget Statement put forward by the Minister for Finance is widely welcomed.

The Lianhe Zaobao headlined its news item "Encourage people to do business and to procreate." The tax incentives on procreation are indeed encouraging to the newly wed couples. However, bringing up children in a modern society is not a simple matter. On the one hand, we want our young people to get married and have babies earlier. On the other hand, we want them to go out to work so as not to waste manpower. It looks as if they have to be very versatile if they want to live in this society. Hence, it is important that, apart from tax concessions, the Government has to provide more facilities to make it possible for our young couples to have children while they are making a living.

On taking care of aged parents and the disabled dependants, the Government should provide other assistance to alleviate their mental and financial burdens.

It is believed that the 5% across-the-board tax rebate is not enough. Why not lower the personal income tax rate? Firstly, we could attract foreign talents to come here to work, secondly, we could stop our brain drain; and thirdly, we would make it more worthwhile for our people to work harder.

On foreign maids levy, I hope the Government will consider giving divorced men, widowers and those separated couples some tax rebates because it is due to circumstances beyond their control that they have to take up the burden of bringing up their children.

In this year's budget, we see no indication of Government's special concern for culture, education and the humanities. This is regrettable. For the last 25 years since independence, we have been preoccupied with economic development, so much so that while our people are well-clothed and well-fed there is something lacking in culture and the pursuit of humanities. We have arrived at a stage when we "have acquired all the material things but have lost the sense of being human."

The Government ought to pay greater attention to the cultural developments of the major ethnic communities, take in their best elements and transform them into a Singapore Culture. Let us look at the educational systems and cultural features of other countries and work out a comprehensive plan for our future in matters of education and culture.

Our education should not be biased towards utilitarianism. Nor should the curriculum be strictly confined to the imparting of knowledge and teaching of skills, the chief purpose of which is to produce usable screws for the labour market. The purpose of education should be rather the nurturing of citizens with culture and refinement. The strengthening of our economy does not necessarily lead to the raising of the level of our culture. If today we are not doing something to establish our cultural identity our city state will degenerate into a modern jungle of science and technology and, worse still, the denizen of this jungle will one day wake up to find that in spite of all the modern comforts he could have, he will still be gnawed by a sense of void in his soul. All the economic growth will be meaningless.

Hence, the Government should pay equal attention to matters pertaining to humanities and cultural development while they are also concerned with economic growth.

Dr Lee Siew-Choh (Non-Constituency Member): Mr Speaker, Sir, the Straits Times has called the Budget a "Celebration Budget". Its editorial on 5th March describes it as "all honey and no sting". The International Chamber of Commerce, the Singapore Manufacturers Association and the Indian Chamber of Commerce have all acclaimed it in different fashions. And PAP Backbenchers, not to be outdone, have also labelled the Budget as "painless", "happy", "no minuses, all pluses", and so on. Of course, business and especially big business corporations have good reasons to be happy. They have benefited immensely from Government give-aways. As disclosed by the Minister for Finance, over the years, Government has channelled to business and especially big business since 1980, through tax rebates and rate reductions, more than $1 billion a year. In the 1990 Budget, MNCs will again benefit by another $100 million, maybe very much more.

To avoid unfavourable public reactions, the PAP has regularly imposed taxes, not during presentation of the yearly budgets, but in the months between budgets. These taxes are imposed by decree, and without even a parliamentary debate.

All of us will remember, Sir, the sudden hefty increases in diesel taxes, in parking fees, in levies on foreign workers and foreign maids, in taxes on motor vehicles, including motor import duties, road taxes and additional registration fees, in additional hospital fees and charges, and in other fees and charges on goods and services by Government departments over the last few years. All these are not painless but painful taxes. They are not honey but stings, and they have given the people in Singapore no cheer and no cause for celebration whatsoever.

To appraise a budget, Sir, we need to see further than taxes. We need to see how revenue is spent. And we want to know how Government uses the budget to redistribute income and wealth among the people.

In the Budget, Government has announced a string of goodies to benefit the corporations - income tax cuts, stamp duty exemptions, concessionary tax cuts and incentives for offshore transactions, and a further extension of post-pioneer tax-free status from five to 10 years. From this, it would seem that Government is fearful that MNCs do not make enough profits, and is anxious to ensure that they make more and still more super-profits year after year. Many have said that the PAP Government is a government of MNCs and for MNCs.

What of our small and medium enterprises? Don't they also benefit? Yes, Sir. A good number of SMEs do benefit. But they benefit only marginally. And some SMEs hardly benefit at all.

The PAP believes in pampering the MNCs, not the local entrepreneurs. And what of the people of Singapore, 70% of whom earn less than $1,000 per month? Have they also benefited? Yes, in a way. They do not have to bear new taxes this time, which is a consolation. But only until the next round of PAP's inter-budgetary taxes. To the people, the PAP means pay-and-pay, and we have been paying and paying all the time.

Nevertheless, we have had three good years with billions of dollars in surpluses each year, and we have also billions of dollars in foreign reserves. And our Ministers and top civil servants have given themselves huge salary increases, making them the highest paid Ministers and top civil servants in the world.

In our city-state in which poverty still exists in the midst of plenty, and confirmed by the PAP itself in the 1990 Party Convention recently, one would have thought that the Government might still remember its early PAP party aims and promises, have some considerations for the poor, the low and middle income groups, and perhaps help relieve some of their tax burdens, sufferings and hardships.

Government statistics have shown that the cost of living has gone up, that daily necessities are more expensive, that the dollar can buy less and less, and that many families have found it more and more difficult to make ends meet. We do not expect the PAP to emulate President Suharto and similarly issue a call to tycoons: "Share your wealth". But does the Budget make provisions to help the poor? In this 25th year of the PAP rule?

Let us see what the 1990 Budget brings to the people of Singapore. Government asserts that "our existing personal income tax rates remain fair and equitable". Are they really fair and equitable? For whom? The Minister proposes "to give an across-the-board once-off rebate of 5% personal income tax for Year of Assessment 1990". "The estimated revenue loss is $60 million", he adds, in order to show how magnanimous the PAP is. Of course, this could create the impression that everyone of our taxpayers will get a real bonus. But who are those who will benefit from this largesse of $60 million? As is well known, Sir, across-the-board rebates benefit only those who have high incomes and naturally pay higher income taxes. It benefits the lower and the middle income groups very little. For instance, a taxpayer who pays an income tax of $100 will get a rebate of $5 (not even enough for a plate of mee), whereas a taxpayer who pays an income tax of $10,000 will get a rebate of $500. And of course a taxpayer who pays an income tax of $50,000 will get a rebate of $2,500. How is that fair and equitable? The Minister will have to answer us.

Let us consider some of the Government's concessions in the Budget.

Tax reliefs for aged parents and handicapped dependants, increased from $2,500 to $3,500, are certainly welcome. However, this also exposes the double standards employed by Government in its dealings towards the rich and towards the low-income groups.

In rationalising give-aways in tax rebates and rate reductions to big business, the Minister says that Government should not be miserly. But does he show any charity when it comes to giving urgently needed relief to those who have financial difficulties in looking after aged parents and handicapped dependants? The Minister allows, rather grudgingly I think, only $1,000 extra this year. Calling this "miserliness" on the part of the Minister would be charitable and euphemistic. Some people would say that the Minister is insensitive and uncaring.

As is well-known, looking after the aged and handicapped dependants these days would each require a minimum of $600 to $800 a month. This works out to a total of $7,000 to $10,000 a year. The number of taxpayers looking after the aged and the dependants is not very large. Therefore, total expenditure in this instance is very small compared to the millions and billions of dollars given away to big business. Millions of dollars have also been unnecessarily spent on all sorts of PAP celebrations. Need Government be so uncaring towards those in need? Should not Government give more generous tax reliefs to them?

Procreation incentives. Special tax rebates to encourage families to have their second child earlier is to be welcomed, especially when the new rebate, together with existing rebates for the third and fourth child, will be allowed to be claimed over an extended period of 21 years.

I must congratulate the ingenuity of those who have thought of such a proposal, and I believe a good number of families will certainly be influenced to have their families earlier. An estimated 10,500 women will benefit, according to the Business Times.

It is unfortunate, however, that this proposal, like the existing third and fourth child rebates, is aimed mainly at the higher-educated and better-off parents. It is therefore somewhat unfair and discriminatory to other women who are not so qualified. Therefore, to be fair and equitable, in addition to the present scheme of tax rebates, let Government also give less well-off families outright grants of, say, $3,000 to $5,000 for each child who is born. In this way, Sir, all will benefit and none will be left out. That would certainly help correct the present population decline, and put right the disastrous consequences of the many years of the erroneous population policy of the past.

Yet another point which should not be forgotten is that certain categories of university graduates will not easily benefit from the new procreation incentive unless they get married while they are still undergraduates. In the medical discipline, for example, assuming that the student enters the university at age 19, he will be at least 25 years old before he passes out as a full-fledged doctor. Add a few years for national service and studies for a higher degree - FRCS, MRCP, whatever - he would be well over 30 years old, well past the 28-year target for the incentive before he can decide to get married. Similarly, a dental surgeon or an architect will be nearing 30 years old when he enters the professional market, so to speak. How then will such graduate professionals benefit from the present procreation incentives? Has the Minister done his homework well enough?

The relief for foreign maid levy extended to divorced women and widows with children is also welcome. Government should realise that any levy on foreign maids means unnecessary hardships for working mothers who need domestic help and yet may not be able to afford extra levies. After all, no household would incur extra expenses to engage foreign maids unless absolutely necessary. Moreover, such a levy somewhat runs counter to the policy to promote procreation and early establishment of a family for young working couples. Government should therefore do away with levies on foreign maids for working mothers altogether.

As against all these concessions, there is, however, the promised future imposition of consumption tax. The Minister has said that legislation on a comprehensive goods and services tax will be introduced this year. As is well known, consumption tax is a regressive tax. The tax burden is heavier for the low-income groups and it is certainly inflationary. It can also adversely affect the retail trade as well as tourism. Of course, we already have various indirect taxes which are in fact all consumption taxes. The PAP merely wants to further increase the category of taxes. This can only mean an increase of the tax burden for those with low incomes. Therefore, such consumption taxes should not be imposed. It is a tax that is most unfair and inequitable for the low and middle income groups, more than 70% of our population.

Sir, further unfairness in the PAP's scheme of taxation is the fact that, despite widespread appeal from the people of all walks of life, the Government has still turned a deaf ear to the call for an increase in personal income tax relief. In 1959, before the PAP came to power, personal relief was $3,000 for a taxpayer and $2,000 for the spouse, ie, $5,000 for a married couple. But very quickly in 1960, the PAP reduced personal relief to $2,000 for a taxpayer and $1,000 for the spouse, ie, $3,000 for a couple. This reduced personal tax relief from $5,000 to $3,000 per couple has remained unchanged for 30 years. As the Minister himself well knows, school fees, bus fares, radio and TV licences, housing, PUB bills, hospital fees and charges, other fees and levies, household expenditures have all gone up. Yet, the personal tax relief remains the same, and the low-income groups are made to pay income tax when they should have been exempted. I am sure the Minister cannot honestly maintain that making those with low incomes pay income tax is fair and equitable. In the circumstances, the only decent thing for the Minister to do is to raise the personal tax reliefs immediately from $3,000 per couple to $5,000 per couple, to begin with, ie, to the pre-PAP 1959 level. In Malaysia, the personal income tax relief per couple is $7,000. Why cannot our personal reliefs be harmonised? After all, taxes should be paid by those best able to pay them, not by those who can hardly make ends meet. With such miserly personal reliefs, the income tax rates clearly are most unfair and inequitable.

And how are our taxes to be used? Revenue collected by Government should be channelled to meet the needs of all the people in the country, not just for the benefit of the privileged and those already sitting pretty at the top. Thus adequate funds either in the form of grants or subventions should be made available to ensure equal opportunities for education for our children to develop to the best of their potential all the way to the top. Similarly, more funds should be made available to ensure good, affordable medical care for the people and especially for the aged, and to generally improve the quality of life for all Singaporeans. But it would appear that in all these aspects the Government has not shouldered its rightful responsibilities to the people.

Let us see how Government proposes to spend some of our revenue in 1990. The biggest expenditure is reserved for the servicing of public debt. In 1989, the amount was more than $5 billion. In 1990, the amount will be increased to more than $6 billion. Interest payments alone will come to $1.8 billion, enough to build, I do not know, how many schools, Sir.

Who are those who benefit from receipt of such huge amounts of interest? They are those who can afford to buy Government bonds and Treasury Bills. They are not the low, middle, or even the moderately high income groups, but the finan- cial institutions and the very rich. Who are those who contribute towards payment of the interest on these Government bonds and Treasury bills? The people of Singapore, the common man-in-the-street. This is one of the most unfair and inequitable ways in which the budget has been used to redistribute wealth in Singapore, from the comparatively poor to the rich. At one time, the PAP had claimed that it was playing the role of Robin Hood in taking from the rich to subsidise the poor in low-cost housing. We can see from the servicing of our public debt alone that the PAP is no Robin Hood at all. In fact, it is the very opposite, a Robin Hood in reverse. It takes taxes from the people in order to pay vast sums of interest to the rich and super-rich, including foreigners.

The budget provides for more loans to be raised this year. Do we really need to raise loans and more new loans when we have such huge surpluses and such huge foreign reserves? And what about defence? The provision for defence amounts to $3.2 billion, another huge chunk of our budget. And if we add also the Development Estimates, the amount adds up to $3.5 billion, more than one and a half times the amount budgeted for education, nearly six times the amount budgeted for health and 15 times the amount budgeted for community development.

Sir, we have been told that we should increase productivity. Then do we really need to spend so much on something which is totally unproductive? When the whole world is cutting back on defence expenditure, and the US has said that its reduction in forces in Asia will not affect security in any way, do we need to increase our expenditure on defence by 19% over the 1989 expenditure, and thus take away funds which could be better spent on education, health and community development for the betterment of our people?

Sir, we need to be realistic in our assessment of the political and military situation in and around South East Asia. We need to put our priorities right. We do not need to spend billions of dollars on defence in order to safeguard the security of Singa- pore when a much smaller sum would suffice. If we continue to raise expenditure on the wrong things and neglect to spend appropriate funds to carry out policies that serve the people well, we will all be losers in the end. No wonder thousands of our best brains leave Singapore for other countries every year. One of the main reasons why people emigrate is that they can no longer tolerate the policies pursued by our insensitive and uncaring Government.

Let me summarise, Sir. The budget proposes more give-aways to big business. It has also proposed a few goodies to the people but these have not really helped those most in need of Government's assistance. At the same time, Government has continued tax policies that shift tax burdens more onto the shoulders of the poor, low and middle-income groups. It has thus widened the gap between the rich and the poor. The budget has all its priorities wrong, and it is certainly not a fair budget for the vast majority of the people of Singapore.

I hope the Minister will reply to the points I have raised. 3.25 pm

Mr Heng Chiang Meng (Cheng San GRC): Thank you, Sir, for giving me this opportunity to speak.

Sir, I support the motion in the name of the Minister for Finance. Before I go into it, I know that the Non-Constituency MP, Dr Lee Siew-Choh, brought up a number of points and I am sure the Minister for Finance is capable of replying to all these points one by one. But, as one with more than a passing interest in financial matters, I would just like to touch on three points.

One, he objected very much to the channelling of $1 billion to businesses since 1980. I do not really find anything wrong with that because these concessions have helped to create better business conditions, have created more jobs and, in fact, resulted in higher salaries for the workers. As a result, this has generated more revenue for the Government and is, in fact, one main reason for our happy state of affairs. Perhaps if he can read the theory behind supply-side economics, he will find that this particular branch of economics does have positive effect on Singapore.

Another point he brought up is his objection to the across-the-board rebate because he thinks that it is unfair. He gave the example of the person paying $100 in income tax. Such a person would get $5 rebate, whereas the person paying $10,000 in income tax would get $500 rebate. Sir, this is simply the marginal rate at work. I find it difficult to understand his objections when in the next breath he asked for more personal and other types of tax reliefs. Does he not know that, for example, if you were to implement his suggestion of increasing the personal tax relief by $2,000 to $5,000, then a taxpayer at the marginal rate of 30% tax bracket will in fact pay $600 less in taxes. Another person at the marginal rate of 5% will only get $100 in lesser tax paid. Does this mean that his suggestion is also unfair?

Sir, another point relates to his comments on public debt servicing and Government bonds and Treasury bills. Being in the banking sector myself, I must first state that I have a vested interest. I do object personally to the system here, but for diametrically opposite reasons as the NCMP. Under our system, the Government has created statutory requirements for many financial institutions to buy a certain required number of bonds and Treasury bills. It is because of this demand created by statute that these financial institutions are forced to buy them. And in so doing, they therefore compete for a very limited supply, just like the quota system, of bonds and bills available. The rates they therefore earn on these instruments are in fact very low. The Government in turn takes this money on which they pay low rates and reinvest it into much higher yielding instruments. In so doing, it in fact makes quite a substantial sum of money for the Government. Perhaps I would just like to bring his attention to page 7 of the Budget. If we look at the Budget in Overview, you will find that the investment income under Consolidated Revenue Account is $1.1 billion, Development Fund Account is $2.8 billion and Sinking Fund Account is $397 million, whereas Debt Servicing is only $1.8 billion.

Sir, although I said earlier that I supported the motion, I must add that I do find it somewhat disturbing. Sir, that it is pro-big company, it is painless, it is a celebrations budget, and various other favourable descriptions of the budget is not the issue. The real issue is that with such sterling performances of the economy over the past two years, and again probably this year, the Minister could perhaps be more generous, especially with the healthy surpluses of past years and the increased revenue from various measures.

Sir, one disturbing aspect is that the Minister, I feel, has left himself with the role of being a Santa Claus and, as I said earlier, not a very generous one at that. His function in revenue collection appears to have been usurped by other Ministers, especially the Minister for Communications and Information. Of course, the other Ministers always proclaimed that revenue generated was only incidental and the real purpose was not the revenue but the need to control one thing or another; or so they said. But, when all is said and done, somehow or rather, money always increases in the Government's coffers.

Sir, I hope that such off-budget increases in tax, in fees, in commission, or call it whatever you will, are not a trend for future budgets. In this respect, I do very much agree with my colleague, Mr Das, that it poses very difficult conditions and situations for businessmen and businesses to do their planning. Sir, in any event, with such increases it is no wonder that at Budget time, the Minister gives away candies, like a mother giving sweets to pacify a crying boy after he has been caned by his father, even though he has done no wrong but was only just trying to get his father to agree that he has grown up, is a bit more responsible and would appreciate having a little more freedom and money to decide what is good for himself.

Yes, I did say sweets, because, for example, the tax concessions announced amounted to revenue forgone of about only $168 million. Yet the estimated additional revenue to be collected from the car quota premia, if we take $5,000 to be the average price bid for the year, could be $250 million or more. This additional revenue is not even reflected in the Budget document. And this will be on top of the $2 billion to be collected in financial year 1990 on import duties, registration fees, additional registration fees, PARF, diesel tax, road tax, etc. This does not even include the revenue from petroleum import duties, which is another $0.5 billion more. Perhaps the Ministry of Communications and Information should be redesignated as the Ministry of Communications, Information and Finance.

Notwithstanding his comment that prudence should not be equated with miserliness, the Minister should perhaps take note that there is a thin line between prudence and stinginess.

Sir, what is also disturbing is the warning that lies behind the sweets and candies given by the Minister. Here I refer specifically to the spectre of consumption tax raised by the Minister. I am against this consumption tax for the same reasons given by Dr Lee. Here I must say that, in this instance, I do fully agree with him because such a tax, a VAT tax, for example, is inherently inequitable. It taxes the poor relatively more than the rich. It retards the growth of one of our major industries, tourism, especially so in our case when we are trying to promote Singapore as a shopping paradise.

The oblique reference to developed countries and the value-added tax as an integral component of the system of revenue, in my opinion, is laughable if not for the fact that this is no laughing matter. Surely the Minister must be aware that:

(a) Singapore does not follow the systems of developed countries just because they have such systems. We do pick and choose; and

(b) Most importantly, they have VAT for very good reasons. They needed VAT because of perpetual budget deficits and bankrupt treasuries.

Sir, that surely is not the case with us, and never would be the case if we can believe what the Minister's own Budget document says; and I would like to quote from page 11 of the Budget document:

'The aim will be to ensure that operating revenue (defined as revenue less investment income) is sufficient to finance all operating expenditure (defined as recurrent expenditure less debt servicing), and that annual recurrent and development expenditures do not exceed revenue collection.'

In other words, Sir, what this means is that if we collect less, we will spend less. With this philosophy of a balanced budget in the implementation of public finance (something I must add that I agree and I subscribe to), I cannot really see the day when we need to increase our revenue through consumption tax.

However, in case the Minister thinks that I am totally against a broad-based system of consumption tax, I would hasten to add that I, too, favour an indirect method of taxing consumption rather than the direct method of taxing income. After all, Sir, paying tax on consumption is voluntary in that if one spends less, one pays less, whereas paying tax on income is not, unless of course one takes a salary cut or stops working altogether.

But what I am against is a simplistic system of consumption tax, such as the VAT or a sales tax, even with exemptions. Unfortunately, such exemptions usually hurt the largest group of citizens in our society, the lower middle income group. Sir, this group is often too rich to enjoy the relative benefits of the exemptions but too poor to afford the higher prices of unexempted items caused by such taxes.

Sir, my stand on this is not unknown, having said so in this Chamber in 1986. Hence, if the Minister wishes to prepare for a broad-based system of consumption tax, may I remind him to seriously consider the concept of an "expenditure tax". Like VAT and sales tax, Sir, the expenditure tax is also a tax on consumption. But, unlike them, it can lend itself to a progressive structure, similar to the progressive nature of income tax. Simply put, this means that the more a taxpayer spends, the higher would be his marginal tax rate.

Sir, using this system, the bias and the inequity against the poor is removed. So too, the hindrance against the tourist industry as it is not a tax on individual items or individual goods but rather on the total expenditure of the taxpayer over a period of time.

Moreover, it will also help to resolve one thorny issue, that of individual Singaporean's interest income earned abroad. Right now, we have a tax system which encourages foreigners to invest their savings in Singapore. Ironically, the same system also encourages Singaporeans to invest their savings abroad. A very ridiculous situation, you may say, Sir, but one which I believe could easily be resolved by a system of expenditure tax.

Sir, this is not a forum for a detailed tax debate, so I will not go into the details of how the expenditure tax can work and how we can resolve the issue of interest earned abroad but not remitted to Singapore. Suffice to say, Sir, if we can encourage these savings to flow back to Singapore, much good will accrue to Singapore's financial centre as well as its economy.

Here I must add that the expenditure tax is not an alternate source of tax revenue. It is in fact a tax reform, ie, it seeks to replace the income tax system. I am aware that while the theory is simple, to replace the current income tax system in one fell swoop would be complicated. And being the cautious man that he is, the Minister obviously would not wish to be adventurous in this area.

May I thus suggest that the Minister look at the benefits of this system and how superior it is to the income tax system. Hopefully, he can be convinced. If so, then it should not be beyond the capabilities of his income tax experts to come out with an experimental project using a selected control group to file two types of tax returns - one based on the current system of income and the other based on a hypothetical system of expenditure. In this way, over a period of years the implications, the effects and other problems of the expenditure tax system could be studied in detail before a final decision is made. Of course, one would have to compensate the taxpayers in the project and perhaps some suitable compensation could be given for the trouble they would have to take to fill in the two sets of returns. Sir, I believe that this system is worth a try. 3.42 pm

Dr S. Vasoo (Tiong Bahru GRC): Thank you, Mr Speaker, Sir, for allowing me to join in the debate.

Sir, I shall be precise, not because the budget has an impact on me but most of the points that I would be raising had in fact been covered by my parliamentary colleagues.

Sir, I must thank the Minister for Finance for having introduced a budget which is commendable and appears reasonable. This budget is widely supported by the business circle. However, for the large number of ordinary working persons, they tend to feel that the budget has little impact. Why, Sir, is there little impact? They feel that they have earlier contributed to revenue through increases imposed by the various Ministries. Whilst this approach takes the heat off the budget there is a danger of lack of coordination among Ministries. This itself may generate inter-Ministry competition and rivalry which may in the longer term lead to lack of coordination and impose different strains on the individual who have to pay higher charges during the year.

Sir, there is certainly a good case for Ministries not to implement increase in charges or fees almost one after another. This is important because the threshold for the individual taxpayer having to be able to manage and cope with it may be reduced. Sir, there is a need to observe this because we may burden the individuals with average incomes and we may generate and cause inflation.

Sir, the man-in-the-street is beginning to feel that the prices of goods and services are increasing rather rapidly to their liking. In this respect, I would like to ask the Minister whether any steps are being taken to ensure that inflation is being controlled. I hope that we do not create a run-away inflation by our various increases. This is important because it may affect the average working class.

Sir, the budget attempts to address the serious problem of procreation by introducing further procreation incentives. However, it appears rather half-hearted and measured in giving out incentives to promote procreation.

Sir, if we are to deal with this issue more effectively, we need to provide higher tax rebate for mothers in the late twenties and early thirties. It may work better to revise the special tax rebate for mothers.

Mothers who give birth to a second child before 31 years should be given $10,000; before the age of 30 years, $15,000; before the age of 29 years, $20,000; and before the age of 26 years, $25,000. Sir, the tax rebate alone does not solve the problem of the care of their children. It would be necessary to consider two other issues, namely, the need to reinstate maternity leave, and I feel that maternity leave is in fact tremendously important for the third birth. This issue will have to be re-studied so that it will ease the burden of mothers who have subsequent births.

Sir, the second issue that we have to look at is tax incentives for operators of childcare centres at work-place and in the community. In order to encourage more childcare centres to be set up, it is important to provide tax set-off for capital cost spread over a period of five years to employers and the private childcare operators. Unless there are tax set-off and tax incentives, there may be little growth in terms of services for child care. It is in fact a burden and a high cost for operators to run childcare services. I think there is a need to review such incentives given.

At the same time, Sir, it is also necessary to review the childcare subsidy of $100 to mothers in view of the increase of childcare cost through inflation. This subsidy has not changed over time. It may be necessary to review the subsidy.

Sir, I will now turn to health. In looking at the budget allocated to health, I see that the budget is meagre. The need to keep our population healthy has been con- stantly touched upon. In recent years, there has been increasing public concern about the cost and improvements to the health care service. However, the budgetary provisions in the last five years have not reflected our interest to make health care cost remain accessible and affordable. Our expenditure on health care is only about 1.1% of our GDP. This is really meagre compared to other countries. Government expenditure on health as a percentage of GDP is 4.9% in Japan, 6.7% in France, 6.3% in Germany, 5.3% in the United Kingdom, and 5.4% in Switzerland. I am not suggesting that we should follow the GDP expenditure for health in these countries, but I strongly feel that there is a case for us to review the allocation of expenditure to health in our budget.

Sir, we could afford a bit more in terms of allocating funds to health care. As we have accumulated surplus in the last few years, there is a need to review this aspect of expenditure.

With that note, I would like to support the Minister's motion.