MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR 1ST APRIL, 1990 TO 31ST MARCH, 1991

Order read for consideration in Committee of Supply [9th Allotted Day].

[Mr Speaker in the Chair]

Head V (cont.) -

Resumption of Debate on Question [23st March, 1990],

"That the total sum to be allocated for Head V of the Main Estimates be reduced by $100." - [Mr Bernard Chen].

Question again proposed.

The Minister of State for Trade and Industry (Mr Mah Bow Tan): Sir, before Parliament adjourned on Friday, Dr Wang Kai Yuen asked whether the Skills Development Fund could be extended to help the unskilled and unemployed to get back into the workforce. One of the fundamental objectives of the Skills Development Fund is to retrain retrenched and redundant workers in order that they may be gainfully employed again. This objective is provided for under the Skills Development Levy Act.

The SDF provides financial support to defray the direct retraining costs incurred by either the new employer or recognised intermediaries such as the NTUC and employer associations. There were several instances where this funding policy was activated during the last recession. In one case, SBS wanted to convert all its fleet of buses into one-man operation. As a result of this massive change, over 1,400 bus conductors were to be made redundant. SDF supported the retraining of these 1,400 bus conductors to become bus drivers. The support was up to 90% of the retraining cost.

In another instance in 1986, NTUC announced plans to pay for the retraining of retrenched members in selected VITB trade skills courses. SDF also supported this effort at 90%. The retrenched worker had a choice of being re-skilled either through his intended employer or else through his respective trade union or employer association.

As for the retraining of unemployed workers to enable them to join the workforce, SDF has in place a funding arrangement which assists employers to retrain housewives and other unemployed individuals wishing to re-enter the workforce. Companies in the electronics sector as well as the retail sector in fact made use of the SDF for this purpose in 1987.

Recently also the SDF introduced a training leave scheme with the specific intention of giving workers with little education and no skills a chance to upgrade themselves. Under this scheme, SDF provides 100% funding for the training fees incurred.

Sir, I can assure the Member that SDF funds will continue to be made available for workers to train and retrain and to upgrade themselves and for employers to send such workers for training. But the responsibility to recruit such workers must remain with the employers, especially with the present constraints on labour it makes good sense for employers to do so. The SDF on its part will fund their retraining costs.

Mr Lew Syn Pau (Tanglin): Sir, I would like to ask a supplementary question regarding the severe shortage of hotel rooms which we were talking about on Friday before Parliament adjourned. First of all, I would like to declare my interest as the General Manager of NTUC Pasir Ris resort.

Since there is a severe shortage of hotel rooms and since the NTUC has a very nice holiday resort at Pasir Ris, whilst it is fully occupied on weekends and school holidays has spare capacity during working days, will the Minister enable the NTUC Pasir Ris resort to help alleviate the hotel room shortage by allowing it to take in foreign tourists and exempt it from the provisions of the Hotel Licensing Act?

Mr Mah Bow Tan: Sir, Mr Lew Syn Pau has made an interesting suggestion. On the surface of it, I see no reason why the Pasir Ris resort will not be allowed to do so. But if Mr Lew wishes to put the proposal up to the relevant authorities, my Ministry will consider his proposal seriously and sympathetically.

The Minister for Trade and Industry (BG Lee Hsien Loong): Sir, if I may just add a few supplementary remarks to what Mr Mah Bow Tan has said in order to set the issues in context.

MTI's principal concern is to keep economic growth up so that there will be prosperity, jobs, and secure livelihoods and incomes for Singaporeans. The strategy for doing this was outlined in Part I of Dr Richard Hu's Budget speech, ie, to increase the workforce, raise productivity, stay competitive, tap into regional and world growth, build up our industrial and commercial infrastructure, and enhance the prosperity of our neighbours. Each of these is an important component of our strategy and we are progressing all of them in parallel. Overall, we have been reasonably successful.

Many of the concerns which MPs have raised - increasing cost of doing business, shortage of hotel rooms, adjustment problems of SMEs, even to some extent, fears about inflation - are conse- quences of this economic success and have to be seen in perspective, namely, overall reasonable achievements, but individual issues have to be tackled.

Take, business costs. Mr Bernard Chen pointed them out. So did several other MPs. There is no doubt that costs have gone up compared to earlier years. But the data do not show that they have shot up. As Dr Hu pointed out, the proportion of GDP going to wages has only gone up by one percentage point last year, from 40% to 41%, meaning correspondingly the percentage going to operating surplus, ie, gross profits, has gone down by one percentage point, from 60% to 59%. Of course, it is 59% of a considerably bigger GDP. So profits have increased, and at the same time workers' incomes as a proportion of GDP, have gone up slightly, but not alarmingly.

The cost index in which MTI calculates increased in 1988 and in 1989. We started the index at 100 in 1983. In the recession, it rose to 104, up 4 points. Then it came down because of our cost-cutting measures and because the economy slowed down. It has now come back to 95, below the starting point. This shows that we are still competitive.

Let us compare ourselves with the other NICs, because our relative competitiveness is important. Then in fact our cost levels look even better because Korea, Taiwan and Hong Kong have all experienced much more drastic increases in costs than Singapore - because of inflation, very high appreciation of currency, and very drastic wage rises.

So we have to be careful about our cost levels, to make sure firstly that we do not add on piecemeal lots of little items which add up to a substantial and intolerable cost increase and, secondly that at the end of a boom, euphoria does not overcome employers and lead them to pay more generously than they can afford and end up with a hangover. I think we have to be careful, but I do not think there is yet any reason to panic or to cry wolf.

Sir, the Government takes a lot of flak for taking measures which have impact on costs. But Government levies account for only part of the increase in total business costs. The larger part is due to labour, and to changes in market conditions unrelated to Government policies. For example, I have heard that nowadays the minimum price per table for a wedding dinner is $600. This may be high, but it is not something which the Government is able to control and, fortunately, in this case, it is not something which afflicts us every day.

Similarly with hotel room prices or commercial space rentals. These are factors outside our control. Nevertheless, the Government is sensitive to the effects of its policies. While it cannot completely avoid policies which raise costs, it does try to take compensating measures in order to reduce their side effects. For example, one of the reasons why Dr Hu reduced the corporate tax rate this year by one percentage point to 31% was to offset the anticipated effect of the vehicle quota system on transportation costs. The Government recognises that hitherto commercial firms, companies and factories have been able to hire, to own and to use light goods vehicles, trucks, container vehicles at very low road taxes and vehicle taxes. But the quota will change this and add a couple of thousand dollars on to the capital cost of each such vehicle. Therefore, to offset this, we have reduced the corporate tax rate by one percentage point. I think it will more than offset the quota cost, at least for a couple of years. This illustrates the philosophy of the Government.

Related to business costs is inflation. Inflation in Singapore has been low. I circulated a table (Cols. 885 - 886), to show how our inflation compares with other countries. We had 2.4% inflation last year. If you look at the first table, in the other countries in 1989, the US had 4.8%, EEC had 5%, Hong Kong had 10.1% and Korea had 5.7, and Taiwan, 4.4% - all higher than us, 2.4%. The only country lower than us was Japan, 2.3%. So our track record has not been bad. table - Inflation Rate of Other Countries, CPI Inflation Rate For Singapore (Cols. 885 - 886)

Inflation is due to both domestic as well as external factors. External factors are the inflation rates in OECD countries which feed through to us because higher cost of raw materials, higher cost of imported products, higher oil prices. All these impinge on us immediately. If there is a drastic increase in the money supply in the developed countries, for example, if the West German Government decides to exchange East German marks for Deutsche marks one to one, and there are 80 billion dollars worth of East German marks queuing up to be exchanged, and all are converted into Deutsche marks which represent real purchasing power, as opposed to funny money, then 80 billion extra US dollars will be chasing a limited number of goods and services. This is bound to have an impact on money supply, interest rates, and inflation around the world, and therefore upon us. We can insulate ourselves somewhat, but we cannot totally cut off from such effects.

Then there are internal factors which influence inflation - Government levies, and secondly, very importantly, wage increases which exceed productivity growth. MTI studies have found that such wage increases are a very major cause of inflation domestically. Because once people are paid more and spend more, when their spending power is not matched by producing power, this must feed through into higher prices for goods and services.

If you look at last year's figure of 2.4% inflation, the breakdown is as follows: External inflation accounted for 0.5 percentage point. The balance of 1.9% was internal. Of which the Government accounted for less than half, 0.9 percentage points, and the private non-government factors accounted for 1.0 percentage point. So overall the Government only accounted for one-third of the inflation last year.

I know that many Members are concerned that the inflation rates affect different population groups in Singapore differently. There is a special concern for the lower income groups who are least able to look after themselves when prices go up. For that reason, MTI has calculated a separate consumer price index specifically for the lower income group. The figures are given in Table 2, which shows the overall index, and then on the right hand side, the index for the lower income households, ie, those with household expenditure less than $1,000 per month. The figures show that every year the lower income households have experienced less inflation than other households. Starting in 1987, overall 1/2%, lower income households, 0.3%; 1988, overall, 1.5%, lower income, 1.2%; 1989, overall, 2.4%, lower income, 1.9%.

There is a reason for this. The Government land transport policies, which have been so hotly debated in the House, affect the middle income and upper income groups much more than the lower income groups. While we make adjustments to road taxes, petrol taxes, vehicle taxes, ARF, and quotas every year, these only affect people who buy cars. Bus fares have not gone up since January 1982, which is a period of eight years. During this period, cumulatively, the general price level has gone up about 7%, wage levels have gone up 40% to 50%, but bus fares have remained constant. This shows that in fact, there has been a net transfer of income to the lower income groups. I cannot guarantee that we will never increase bus fares, but I think that gives you a feel of the impact.

What should we do in order to control inflation? What can we do? First, we can moderate imported inflation through our exchange rate policy. If the Singapore dollar appreciates, then in Singapore dollar terms, prices of imported goods should go down and, therefore, if there is inflation overseas, we should be partially insulated.

In this respect, the gradual appreciation of the Singapore dollar has helped us. Of course, you cannot just push up the Singapore dollar in order to reduce inflation because if we are not productive, if we do not remain competitive when the Singapore dollar goes up, then our exports will fall and eventually our exchange rate is going to be affected. But, fortunately, hitherto, our exports have been strong, foreigner confidence in Singapore has been strong, inflows of funds have been substantial, the Singapore dollar has appreciated gradually, and so we have reaped a very desirable side effect, ie, lower imported inflation. That is one reason why our external inflation figure last year was only 0.5 percentage point.

Secondly, we can encourage wage settlements to reflect the growth of productivity and the overall performance of the economy. Wage settlements which are wildly unrelated to performance are a strong domestic cause of inflation. It is so in developed countries, it is so in more closed economies, and it is also true in Singapore. This has been proven not just from first principles but through statistical analysis of previous trends of wages and inflation rates. Fortunately, in recent years, wage settlements have been reasonable, so we have not had to worry on this score. I trust that if things continue as they are, this will remain the case.

Thirdly, we can encourage free competition. That prevents cartels and price fixing and what MPs have called "profiteering". For example rice. For many years, the Government controled the rice market. Who could trade in rice what rice could be imported, how much needed to be stocked? The objective was to hold down prices. But because we restricted the number of participants in the market, the number of companies allowed to import and sell rice, so prices were higher than was necessary. A few years ago MTI reviewed of this and decided to allow companies to come in and enter the business so long as they also observe our minimum stockpile requirements. In other words, you can join in, trade import and export. The only requirement is that you put aside two months' worth of imports of rice in the rice stockpile so that should there be any sudden shortage, we are buffered. This stockpile is stored in a Government warehouse so that there is no question the rice is actually there and it is actually in good condition. The new policy has helped in recent years to moderate rice prices when there have been from time to time shortages and price increases in Thailand and elsewhere.

We also used to control the quality of rice which was imported. You could import full grain rice, rice which was more than 90% or 95% full grain, but we forbade imports of rice which was more broken than that. Again, it was for a good motive - to prevent Singaporean consumers from being diddled so that when they bought rice you could be sure it is good rice. But if you are going to make rice noodles, you do not need good rice because it is going to be ground up. Therefore, we also allowed people to import rice which was no more than 65% whole. In other words, very broken rice can be imported, very whole rice can be imported, but in-between grades were forbidden. It did not make a lot of sense. The market knew how to get around this because they imported the good rice and then they imported the broken rice, and mixed the two and they sold it.

We have put a stop to this. I see no reason why we should employ rice inspectors to take samples, separate the good grains from the broken grains, count them and weigh them. It is a misuse of Government manpower. So we leave it to the market. When you buy shoes or clothes or any other types of food, you either buy a no-name product which is economical, or you buy a brand name product and get the guarantee of quality at a slightly higher price. Why should rice be different? If Members come across any other similar examples, I would be grateful if they would point them out and we will put it right in due course.

The bottom line on inflation is that real wages have gone up significantly. The way to keep standards of living rising is to increase productivity and, therefore, keep up the demand for Singapore workers and allow employers competing for their services to bid up their wages.

This brings me to wages. There has been some controversy over how much wages went up. Dr Hu said 10.1%. Mr Lim Boon Heng has pointed out that according to NTUC's survey, it is only about 6%, Dr Augustine Tan pointed out a minor discrepancy in the Government's statistics. They are all correct, especially Dr Hu. Let me explain. The figures of 10.1% increase of wages is based on CPF data and refers to real wages. It refers to the overall wage package, including overtime and year-end bonuses. It is not the base rate. It is also the average for the whole economy over all types of jobs. And because from year to year the types of jobs in the economy changes, that affects the total wage bill.

In simple terms, when people enter the workforce as professionals, they get paid a certain amount. When they enter the workforce as workers, they earn a certain smaller amount. Let us say workers get paid $600, professionals get paid $1,500. Each year, the proportion of people joining the workforce as professionals goes up because younger people are joining the workforce better educated. Each year, amongst the older people who are retiring and leaving the workforce, the proportion of the unskilled is higher. Therefore, every year the workforce contains relatively more professionals and relatively fewer unskilled workers. And because the professionals are paid higher in the first place, even without any other wage increases and adjustments, the total wage bill and the average wage level will go up. Singaporeans are better off. It is a real effect.

In addition, of course, worker wages go up, as Mr Lim Boon Heng has pointed out, about 6% in base wages. Professional wages go up also because professionals are in demand, plus their year-end bonuses and other perks. All these add up to 10.1%, in real terms. So we are, in fact, quite a lot better off this year than last year. Therefore, it is reasonable to put aside some of this increase in CPF. No doubt raising CPF adds to business costs somewhat. But it has to be done.

The 15% CPF cut was a temporary one. To restore 5% of this cut over three years: 1% in 1988, 2% in 1989, and possibly another 2% this year, is a very mild and gradual adjustment which cannot be considered drastic. Certainly if you compare the CPF adjustment in these three years with the actual change in wage levels during these three years, about 10% per year, the CPF increase must be considered minimal. In fact, I think if we had not reduced the CPF by 15 percentage points but only by 10% back in 1986, the economy would still have rebounded. It might not have picked up as drastically as it had over the last few years, and it might have come back onto an even keel more gently. This is in retrospect, but at that time we thought it prudent to make a strong adjustment. In short, restoring 5 percentage points out of 15% cannot be taken exception. It is the least the Government can do to keep our side of the bargain with Singapore workers.

Secondly, ample notice of each CPF adjustment was given, so that the amount could be factored into collective agreements and not be a cost item which is added on after the fact, after employers and employees have settled their collective agreements. Each time we announced it in November and we implemented it in July. There was ample time for this to be factored into calculations.

The valid concern which I think should be borne in mind, is that if the economy slows down, and wages are still stuck at a high level, then profits are going to go down and get squeezed drastically, like last time, because wages are now 41% of GDP. If the GDP growth shrinks and wages do not correspondingly go down, then profits are going to be severely hit. This is why the Government has been encouraging companies to go for flexi-wage arrangements, and to avoid building in cost increases into the basic salaries. I think with strong growth and a tight labour market over the last two years, many companies have neglected this precaution. Between the companies and the unions, they have blithely decided just to pay additional flat amounts which will be difficult to unwind. I hesitate to repeat, to sound like Cassandra, but I think companies should be more careful. Certainly, the Government in its wage adjustment package last year had this very clearly in mind. I encourage all companies to do likewise.

One last thing which the Government can do to moderate cost increases is to keep labour cost from shooting through the roof. We had moderated the labour market by making the best use of foreign labour. For skilled people, we have admitted as many as possible, because each one makes a contribution, and the more we have, the faster the economy will grow. For unskilled workers, we have already admitted many. As Mr Lee Yock Suan pointed out, we are trying to deploy them wherever they can be most productive in the economy. Because for a given total number, it is best for market forces to decide where they are needed, where their contribution is greatest, rather than for the Government to direct certain companies to be eligible for foreign workers and other companies not to be eligible. Who is to say a small and medium-enterprise is not fit to hire a worker if it is able to pay the him a good wage? Hence, the liberalisation of the work permit policy announced by the Minister for Labour. The ultimate objective is to control the total population of foreign workers by means of the levy, but to let the market decide where they should be deployed.

We are not completely there yet, because if we simply lift the administrative restrictions and immediately treat everybody totally equally, we fear a sudden ballooning in the number of foreign workers, which will be difficult to control. But we are moving in this direction. Allowing the new sectors to hire foreign workers is an important first step. And as we adjust the foreign worker levy from year to year, we will take progressive steps to equalise the treatment. Ultimately, everybody will pay the same levy, follow the same rules and limits, and be able to have the same chance of hiring foreign workers.

Mr Bernard Chen (Pasir Panjang GRC): Sir, I thank the Minister for the reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr Chew Heng Ching (Eunos GRC): Sir, I beg to move,

That the sum to be allocated for Head V be reduced by $10 in respect of Code VE 3100 of the Main Estimates.

Sir, as we embark on the next stage of our economic development, we need more entrepreneurs who can generate new economic momentum to propel our economy into a developed economy by the turn of the century.

The Economic Committee, in its report "New Directions for the Singapore Economy" in 1986, called for a concerted effort to promote entrepreneurship and to foster the growth of local companies. In the last four years, the Government has indeed given special attention to the promotion of SMEs as well as local MNCs. The Government, through the EDB and many other statutory boards, has made available various assistance schemes to help local SMEs. An SME Master Plan has also been mapped out, and there is the availability of venture capital funds.

In a further effort to promote or to help business bodies expand their role and reach out to more SMEs, the EDB has come up with this Enterprise Promotion Centre concept, which was set up last year. Furthermore, a Centre for Entrepreneurship (ENDEC) was also set up by the Nanyang Technological Institute as a think-tank to conduct research into entrepreneurship behaviour and ways to nurture an enterprise culture in Singapore.

Sir, these are good starts towards nurturing entrepreneurship. However, promoting and nurturing entrepreneurship is not enough. We must also consciously remove obstacles to entrepreneurship, for example, by keeping our taxation system and other Government policies under constant review in order to stimulate entrepreneurship activities. We must also maintain an on-going review of paper work burden on our local companies. This is the reason why I strongly advocate the need to revive the Business Enterprise Committee under the Ministry of Finance and for it to play an even more active role. The Business Enterprise Committee now seems dormant.

Sir, the point I am driving at is that all these efforts at promoting and nurturing entrepreneurship and developing local companies are multi-pronged. They are undertaken by various agencies in the Government, and there is nothing wrong with that. However, I think these programmes need to be properly supervised by perhaps a high level inter-ministerial committee and also managed or coordinated by a body within the Government with private sector participation. This system will allow for a more systematic way to track the impact of the various programmes and to evaluate the economic benefits.

Sir, I think there is a need to set up a body or an agency within the Government to supervise and coordinate the total development of entrepreneurship in Singapore. This is a suggestion and I hope the Minister would seriously consider the setting up of this agency in order to further promote and develop entrepreneurship in Singapore.

Dr Wong Kwei Cheong (Cairnhill): Sir, the Economic Development Board in its 1988/89 Annual Report described the Small and Medium-sized Enterprises (SME) Master Plan which was initiated in 1988 as a means for the promotion of local enterprises. May I ask the Minister for a progress report of companies that have benefited from this SME Master Plan and how it has helped to promote entrepreneurship in Singapore.

During the Committee of Supply debate on MTI last year, I had asked for a progress report of how local entrepreneurs had benefited from EDB's $100 million venture capital fund. May I repeat the same question this year and hope the EDB has invested more capital on local SMEs than in foreign venture capital funds.

As many venture capitalists in the private sector are interested to support local entrepreneurs who have started risky but sophisticated technology projects with long term significance, I would like to ask the Minister what incentives the Government has introduced to promote the growth of the venture capital industry in Singapore.

Finally, I would like to give my support to Mr Chandra Das for his call that the Government should set up a separate statutory board to look after the interests of SMEs in Singapore. This appeal was also made by the Member for Thomson and by myself during last year's debate on MTI. I hope this year the Minister will consider this proposal more favourably.

Mr Leong Horn Kee (Thomson): Sir, this issue of promotion and support of local small and medium-sized enterprises, generally called in Singapore as SMEs, has attracted much interest and attention in every year's debate.

At the Budget debate last week, many MPs had spoken up in support of local firms. The Public Accounts Committee, in its report of December 1989, had also addressed the subject of assistance to SMEs. Today, again MPs have spoken in support of SMEs.

Sir, we all know that the EDB has established a SME Division which has initiated several measures to assist local companies. However, I must say that there is still a very prevalent perception gap that not enough has been done for local firms.

Sir, like Dr Wong Kwei Cheong, I fully support the call to set up a separate agency to look after specifically the interests of SMEs. There are some 65,000 SMEs in Singapore. To be able to properly reach out to them and to better understand their problems, a separate agency would be best suited to undertake this task. I note that in Japan a similar small and medium enterprise agency is in existence.

Sir, in addition, I have two suggestions as to how we can better achieve more coverage in terms of reaching out to SMEs. Firstly, I would like the Minister to consider, through a government agency, to publish a monthly newsletter to keep SMEs apprised of news, market information and incentives that are being created for them. This newsletter can also be self-funding through advertisements taken up by both local firms and MNCs.

The second suggestion is to set up a Public Information Counter to which the management of local firms can approach to get information and other assistance.

Sir, both these Newsletter and Information Counter can be done by the EDB or by the new SME agency which the Government can consider setting up. Otherwise, we can allow a local professional body called the Association of Small and Medium-sized Enterprises (ASME) to undertake these tasks with some Government sponsorship.

Sir, contrary to several people's common belief, the small firms can make significant contributions to the growth of the economy. I must say that small firms can be effective in our economic development. In an article in the March 1990 issue of "Look Japan", they have called the small firms in Japan the "Little Miracles". May I quote from this article. It says that:

"Small businesses have achieved a far more prominent position in the Japanese economy than have their counterparts in UK, or any other developed economy. Japanese economic prosperity in recent years can be linked directly to the vitality of small and mediums size businesses."

Further on, it also mentioned that:

"Small businesses now attract wide attention as a major corporate segment because of their ability to utilize tight capital effectively, to operate in a variety of diverse fields and, thereby, to underpin the buoyant growth of the Japanese economy."

Sir, in view of the substantial contributions that SMEs can play toward Singapore's economic development, I would like to ask the Minister what are the major new measures undertaken to assist SMEs, and what are the future plans to further foster their growth.

Mr Mah Bow Tan: Sir, the question of SMEs and assistance to SMEs and local entrepreneurs have been touched on by many Members of this House, both during this session as well as during the budget debate. Dr Wong Kwei Cheong asked for a progress report on what has been achieved in the Government's promotion and assistance schemes for SMEs. Mr Chew Heng Ching has also echoed the same sentiments, including the call for a single agency to supervise and coordinate these efforts. Mr Leong Horn Kee made the same point and also suggested several measures, including a monthly newsletter.

Perhaps if I could answer Mr Leong Horn Kee first because it so happens that I have a copy of this newsletter which he has asked for and I have asked for it to be distributed so that all Members of this House would be able to refer to it. The EDB has produced a special edition of this monthly newsletter which at the same time also addresses the concerns of Dr Wong Kwei Cheong. In this special report, is a report card of the achievements and progress of the small and medium enterprise sector of the economy.

If I can refer Members to the headlines, it says here "Local SME Sector Performed Well". I think it sums up very aptly and very nicely the performance and the achievements of the local SME sector for 1989. Let me just highlight some of the significant points that are in this newsletter. I refer Members to figure 1 on page 1 which shows the number of new businesses, new companies, that have been formed. There is a net addition reflecting a healthier environment for small and medium enterprises and for businesses in this sector. Formation of new companies and new businesses grew both in 1988 as well as 1989. Then figures 3 and 4 show the value added per worker in the manufacturing SMEs. The figures for workers in the service sector are not as easy to collate or compare. So we have taken the figures for the manufacturing SMEs as a yardstick of performance. And it shows here not only has value added per worker gone up among the local SMEs compared to the manufacturing sector as a whole, but the percentage growth of value added per worker in manufacturing has in fact out-performed the manufacturing sector as a whole.

Productivity of smaller local SMEs has also significantly improved by 8.6% and absolute figures are shown in figure 5. The third figure down shows the value added per worker going up in 1988 to a figure of $28,000 per worker. In so far as different forms of assistance to local enterprises are concerned, these have also shown steady increase. I refer Members to figures in pages 5 and 6 which show the different disbursements, different amounts given out as tax incentives, as grants under the SITAS scheme, under the Product Development Assistance Scheme, under the SDF, Research Development Assistance Scheme also the amount of loans given out under the Small Industry Finance Scheme. All these numbers have gone up, indicating not only that the sector is performing well but that the Government measures are also being well used.

I refer again to page 6 on the right hand side, figure 1 which shows the number of firms which are participating in the Local Industry Upgrading Programme (LIUP) Scheme. And I draw special attention to this LIUP scheme because this is a scheme which links the SMEs to the MNCs and helps to generate additional assistance to the SMEs in a way which will allow them to tap into the technology and expertise which is available in the MNCs. In 1989, there were a total of 24 MNC partnerships which gave assistance to 104 SMEs to upgrade. All this is an indication that, contrary to what Mr Leong Horn Kee called a perception gap that Government is not doing enough to help SMEs, there are in place sufficient schemes and programmes which SMEs can make use of. I grant that there are still many cases of SMEs not being familiar with the programmes that are available. I would urge the Member and all the local small and medium enterprises to familiarise themselves with these schemes. And on its part, the Government agencies involved, EDB NPB, TDB and so on will take extra care and make extra effort to disseminate this information to the SMEs.

Sir, there has also been a recurrent theme in this session and also during the budget debate when Mr Chandra Das called for a separate statutory board to be set up to look after the interests of local SMEs. This proposal has been discussed before and the conclusion has been that it is better to have a multi-agency approach coordinated by one single and central agency. A multi-agency approach is necessary because the problems that are related to SMEs are multifarious, are diverse in nature, and they come under the purview of not one particular statutory board or agency in Singapore but many Ministries and many agencies. Without this multi-agency approach, a single organisation would be less able and, in fact, unlikely to be able to cater to the diverse needs of the SMEs.

Sir, the SMEs in Singapore cannot survive in isolation. They need support, they need linkages. One of the most effective means of upgrading SMEs is in fact by teaming them up with MNCs through such programmes as the LIUP scheme. The lead agency in this effort must have a good understanding, good connections, and close contacts with MNCs. There are several agencies which are able to provide this lead service. They are the EDB, NPB, TDB, NCB and so on. Sir, at this moment, I feel that the EDB is still the most appropriate organisation to lead the network. I can agree with Mr Chandra Das that small is beautiful, but I am sure he will agree with me also that sometimes big is better.

Sir, let me assure the Member for Cheng San GRC and all the other Members who have spoken in this House in support of a single agency to look after SMEs that the EDB and all the other agencies involved are sparing no effort to help local enterprises grow to their full potential and to contribute to the overall economic development. I repeat again that this is best done by a multi-agency approach and not just one agency, no matter how sophisticated or competent or specialised that single agency may be.

Sir, allow me at this stage also to elaborate on some of the new plans and the future plans that the Government has to help our local companies. I think this is what the Member for Thomson has asked for. For the next phase of our efforts to promote local entrepreneurship in the 1990s, we will adopt a slightly more targeted approach, to provide focused assistance to different groups of local businesses. For more outward looking businesses, companies that are already in a good position to go global, the Government will assist them to enhance its ability to adopt new technologies, to take new business approaches. With a healthy world economy, the globalisation of businesses and fast pace of technological change, there are many opportunities available for local entrepreneurs who are ready and willing to accept these new challenges. We will continue to help them upgrade their technology to enhance their international business linkages. In this connection, we are fortunate to have a strong presence of MNCs in Singapore and this strong symbiotic linkage between MNCs and local enterprises will be able to help both to further contribute to Singapore's economic development.

The presence of good local supporting industries is a major attraction to MNCs to set up operations here. On the other hand, in turn, the MNCs bring along with them new technologies and global markets for local companies. Local companies with a global orientation can also seek assistance from EDB's international direct investment programme to help them grow beyond Singapore.

What about the more domestically oriented local businesses? These businesses which essentially service the local market recognise that they must restructure. They must look at ways and means of enhancing their competitiveness and their efficiency. We will help them to achieve this. For example, Members have no doubt been aware of the SME Master Plan which was formulated last year. As a follow up to the SME Master Plan, EDB has formed a multi-agency SME retail plan consultative committee to draw up a retail plan whose aim is to revitalise and to accelerate the development of local retailers. When formulated, the plan will be implemented on a pilot basis in some of our HDB town centres and hopefully this will serve as models for retailers in other parts of Singapore to follow and emulate.

Sir, I must add a cautionary note here. Restructuring does not come without a price. It is inevitable that there will be some dislocation in this restructuring process. And perhaps some entrepreneurs will have to undertake different businesses or different professions to make better use of their talents. On its part, the Government will continue to ensure that opportunities are readily available for Singaporeans to make full use of their talents to achieve a comfortable living. But to maintain our competitiveness as a country and to optimise the use of our scarce resources, we cannot yield to the easy-way-out approach of giving handouts to subsidise commercially non-viable businesses, no matter how persuasive or persistent these arguments may be.

Sir, to sum up, let me conclude that on top of the present arrangement of general packages of schemes, assistance programmes, which are available to all local enterprises, we will focus our attention on nurturing different groups of local businesses. In this way, we can look forward to helping more outward looking businesses to grow beyond Singapore and at the same time to help businesses which are more domestically oriented to restructure to increase their efficiency and to improve their competitiveness.

Dr Wong Kwei Cheong: Sir, the Minister of State has not answered my question on the promotion of venture capital industry in Singapore.

Mr Mah Bow Tan: Sir, venture capital assistance schemes are also available to the SMEs and the EDB has in fact set up a special fund to help local companies to avail themselves of venture capital funds. If there are any further details that the Member wishes to have, I will be glad to obtain further information from the EDB.

Mr Chew Heng Ching: Sir, before I withdraw, I just want to seek one clarification from the Minister of State. I mentioned the Business Enterprise Committee under the Ministry of Finance. I think its role is very important. One must remember that it was set up in 1987 during the recession years to review rules and regulations with a view to removing red tape so as to facilitate business operations of local SMEs. I would like the Minister's view on whether he would consider transferring that role to MTI, since MTI could perhaps more effectively manage the SMEs.

Mr Mah Bow Tan: Sir, I believe that the Committee was set up, as the Member pointed out, in 1987 under the Ministry of Trade and Industry. So in fact the Ministry of Trade and Industry does have that responsibility to ensure that there are no impediments to business, whether it be red tape or whether it is in some unnecessarily inflexible implementation of rules. In so far as whether those rules concern the small and medium enterprises, the Small and Medium Enterprise Division of EDB does perform that role.

BG Lee Hsien Loong: Sir, if I may just elaborate a little in Mandarin on what my Minister of State said.

(In Mandarin): Sir, SMEs, are not a new question. Every year, in the debate on MTI's budget, if we do not talk about SMEs, something seems to be missing. The economic development of Singapore needs a two-pronged policy. On the one hand, we have to support the development and success of our local enterprises. On the other hand, we need to have the presence of MNCs in Singapore for their contribution to our economy. I know that many local companies take the view that the Government has been biased in favour of the MNCs, giving too many concessions to them, so that local companies are at a disadvantage in recruiting workers and in their business operations. This is understandable.

However, if we look at it from the point of the Singapore worker, he has two options. He can work for the MNC or he can work for a local enterprise. Of course, he will have to make his own calculation and decide which job will give him a better income. If we make a ruling to say, "No, he cannot work for MNCs, he must work for SMEs", this will be unfair to him. Furthermore, I think politically this will not be a wise move. Therefore, we have this problem: how do we help the local enterprises to develop side by side with the MNCs?

One way is to make use of the purchasing power of MNCs to help the local enterprises, because many of the customers of the local enterprises are the MNCs. The MNCs can provide advanced technology to the local enterprises and help them to improve the management methods and raise their productivity and competitiveness. This is the purpose of LIUP plan.

Another way if for the Government to set up agencies to provide various schemes such as SITAS, SDF, RDAS, etc, to help the local enterprises to improve their performances. However, the most important thing is not what the Government can do, but what the companies themselves can do. If we look at the statistics, with the smaller companies, the average productivity per worker is about half that of the worker in the big companies annual productivity of a worker in a large company is $55,000, whereas in a smaller company, it is only $28,000. If your productivity is half that of others, how are you going to compete with others for your salary? It is very difficult. So the most basic problem is that local small companies must reform themselves and change their method of management and operation, eg, by changing from a small sundry shop into a modern style minimart, so that their turnover can increase and the display in their shops could be modern and attractive. They can be air-conditioned with lighting effects, etc, to provide better service to the customers and also improve their profits.

You cannot just do it like a magician, nor is the Government a magician. We cannot perform miraculous stunts overnight. But I believe if the proprietors of the smaller companies can cooperate among themselves and also work with EDB to make use of all the schemes and concessions provided by the Government, they can improve gradually year by year and lessen their problems, and the problem will diminish. The statistics, show that although the productivity of workers in the smaller companies is still only about half that in the bigger companies, the Productivity growth in smaller companies is faster than that of the bigger companies. So in the long term, the smaller enterprises in Singapore should have quite a bright future.

Mr Chew Heng Chin: Sir, I withdraw my amendment.

Amendment, by leave, withdrawn.

Dr John Chen Seow Phun (Hong Kah GRC): Sir, I beg to move,

That the sum to be allocated for Head V be reduced by $10 in respect of Code VE 5200 of the Development Estimates.

Sir, Singapore rightly believes that science and technology is the key to our economic progress and prosperity. The Government has committed and given large sums of money to promote R&D activities. One of the important efforts is the establishment of R&D institutes. We have seen over the last five to 10 years the emergence of several R&D institutes, such as the Institute of Molecular and Cell Biology, Institute of Systems Science, Information Technology Institute, GINTIC, and so on. Two other institutes, the Institute of Micro-electronics and Institute of Manufacturing Technology will be set up in the near future.

Sir, there is no doubt that we have to maximise the chances of success of our R&D institutes. However, I am concerned that there has been an apparent lack of coordination in our overall effort to establish these R&D institutes. The result has been that while one or two institutes may be doing well and able to attract substantial funds from the industry, the performance of the rest may be mediocre.

Setting up a successful R&D institute is a complex task. It involves, among other things, a clear identification of the need, a careful definition of a set of objectives, an adequate feasibility, planning and design study, consideration of manpower and other resources, and proper management and evaluation. There is therefore a need to have a central organisation to assess the feasibility of a new institute, to provide better direction to existing institutes, evaluate their progress and to ensure proper accountability. This organisation could also come up with a R&D master plan for Singapore and coordinate all our R&D efforts. Perhaps the role of the existing Science Council should be expanded to take on this responsibility.

I would appreciate the Minister's response to my comments and suggestions.

Mr Mah Bow Tan: Sir, Dr John Chen has quite rightly pointed out that R&D is a key factor in Singapore's economic development strategy. May I also point out to him that R&D is a relatively new area for us. So in this respect it would be prudent and useful for us to learn from the experiences of other countries. Taiwan, for instance, has the National Science Council (NSC) which is responsible for the planning and coordination of national science and technology development. The NSC promotes the establishment of high-tech industries through a science-based industrial park, such as the Shin Chu Science-Based Park, which has been highly successful and it has spawned a whole range of new high-tech industries staffed by many local Taiwanese.

Sir, in Singapore, we have at the moment five main R&D institutes and Dr John Chen has pointed them out to us - IMCB, ISS, ITI and so on. Each institute is supervised, managed, and guided by its own advisory and management board, which comprises influential members from industry, Government bodies and academia. These R&D institutes specialise in their own fields in different areas of technology and they answer to different parent organisations.

As we strive to develop expertise in new technologies and new R&D institutes are established, I think what Dr John Chen has pointed out, ie, the danger of duplication of resources and perhaps non-optimal use of resources may arise. So together with the Ministry of Education and the Ministry of Finance, my Ministry will explore this possibility of strengthening the present role of the Science Council. For example, we will be looking at whether the Science Council can take on a broader role in promoting R&D efforts and in formulating R&D policies and strategies. In this way, the Science Council can also serve as the central body which Dr John Chen has proposed to oversee and to coordinate our major R&D institutes.

Dr Wang Kai Yuen (Bukit Timah): Sir, the topic under discussion is one that I am rather familiar with. When I left the Institute of Systems Science in July 1989 to join the private sector, I have been with the Institute for seven years, the last three of which as its Assistant Director for Research. So in the course of my work I have gotten to know the key people in the IT R&D industry. Currently, I am a Board member of NTI GINTIC Management Board. So I think I am qualified to offer some opinion in this regard.

To begin with, Sir, let me state that I am in full support of our effort in information technology R&D. As the Minister pointed out, compared to the effort in South Korea and Taiwan, the effort in Singapore was started a bit late and, in fact, our current effort can still be beefed up. However, as Dr John Chen mentioned in his speech, he has hit the nail on its head when he pointed out that there is a lack of a central coordinating body for our R&D efforts. I think the problem actually lies squarely with the Government. For instance, in FY 89 there was a budget of $50 million in R&D funds administered by the Ministry of Finance. Yet, out of the three IT institutes supported by the fund, two report to the Ministry of Education, and only one reports to NCB, which in turn reports to the Ministry of Finance.

Thus, Sir, in my opinion, the line of control for these institutes is not very clear, especially for those reporting to the Ministry of Education. For instance, neither the Ministry's officers, Permanent Secretary or the Minister for Education are involved in the review of the performance of those two research institutes I have identified. Hence, it is not very surprising that of the three institutes I mentioned, perhaps only one which reports to the MOF directly has performed satisfactorily to-date. Furthermore, we are at this moment debating this issue under the Ministry of Trade and Industry and, to my knowledge, MTI officers were neither involved in any substantial way in the direction setting nor the coordination of these research institutes. So I am very glad to learn from the Minister that he is now considering to upgrade the role of the Science Council to perhaps play this role.

Finally, Sir, with all due respect to the ability of the officers involved, I think the Ministry of Finance's Budget Officers are not necessarily the right group of officers to approve, coordinate and monitor R&D efforts. They do not necessarily understand the R&D process and they are easily awed by the technology involved. With this line of control rather unclear, it is not surprising that our R&D efforts on which we have allocated so much money run the risk of missing its target. Furthermore, Sir, to my knowledge, the performance measures of all those R&D institutes have not been finalised as yet. Without well-defined performance measures, how do we know the money we spend on R&D is money well spent? When the Government does not take the lead to state its objectives in R&D programmes, the institutes are left to define their own, and the results are definitely less than satisfactory.

It is indeed quite surprising to me, Sir, that this Government, with its well-known tough budgetary control process in other areas, approves large sums of money for R&D in what I would consider a rather lax manner. I think the Minister should consider and look into this matter.

Mr Mah Bow Tan: I thank the Member for his comments and I am pleased to note that he agrees with the broad thrust of our approach. I will be pleased to hear some more comments from him and perhaps to ask for his assistance to help us formulate future R&D policy.

Dr Wang Kai Yuen: I accept, Sir.

Dr John Chen Seow Phun: Sir, I thank the Minister of State for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $118,351,800 for Head V ordered to stand part of the Main Estimates.

The sum of $513,891,500 for Head V ordered to stand part of the Development Estimates.

1.49 pm

Head P -

The Chairman: Head P - Ministry of Health. A number of Members have given notice of similar items for discussion under amendments (1) and (3). For the sake of convenience, I shall take the discussion for both amendments (1) and (3) together, that is, under amendment No. (1). Taking into consideration the total time allocated for both amendments (1) and (3) and in view of the large numbers of Members who have given notice of their intention to speak on both the amendments, I have decided that each Member will be given four minutes for each item he or she has given notice. A Member who has more than one item to raise under both amendments shall do so one after another. In this way, every Member who has given notice will have the opportunity to speak.

Dr Aline Wong, you have three items under both your amendments. Therefore you have 12 minutes.

Dr Aline K. Wong (Tampines GRC): Mr Chairman, Sir, can I clarify? Do I have to speak on the three together?

The Chairman: That is what I have just said.

Dr Aline Wong: Sir, I beg to move,

That the total sum to be allocated for Head P of the Main Estimates be reduced by $100.

On health expenditure, the FY 90 budget allocation to MOH is a total of $596 million. The present budget is 2.3 times that of FY 80. Government health expenditure has grown at 13-14% per annum. According to some calculations by NUS economists, the private health expenditure has grown at the rate of 12-13% per annum also.

So Singaporeans must be prepared for a continuous rise in health expenditure. To slow down the rate of cost increase within the public sector, we must put more emphasis on efficiency. At the very least, efficiency should mean lower cost for the same quality of medical care. But our ultimate goal must be to raise the quality of medical care without disproportionate increases in cost. Towards these ends, the hospital restructuring programme has gone on at a rapid rate. What are the results so far? It may still be too early to judge, but I think there are some worrying signs. I have a few observations.

First, on the rising level of subventions. The figures are quite puzzling. For SGH, the annual operating deficit prior to restructuring was $40 million. Since restructuring, the recurrent subvention for FY 89 was $65 to $66 million, and for FY 90, even higher, at $72 million. For NUH, the subvention in FY 89 was about $21 million, rising slightly to $23 million for FY 90. And in spite of these subventions, Sir, both hospitals have been making losses. What are these subventions for?

With the restructuring of the hospitals, the expenditures and revenues are no longer reflected in the MOH's budget documents. So how are we to know whether the subventions are truly needed and the money wisely spent? Instead, we are asked to approve in Parliament, almost in a blank cheque manner, the following GIAs (grants-in-aid) to five Government restructured hospitals, including NSC, that is $137.6 million, as well as a total of $33.8 million for development expenditure.

How do we know whether these capital grants, including depreciation expenses attributable to subsidised patients, go to medical equipment or go to buildings and offices? To some people, the improvements in physical facilities and hotel services are extravagant and the money ill-spent. As for medical equipment, no doubt we have to aim for medical excellence, yet professionals who order such equipment should be fully aware of the cost-effectiveness of hi-tech machines.

So my point is, first, accountability. If we do not know the establishment figures, nor the performance indicators, if we do not know where do these GIAs and capital expenditures go to, how do we know that these organisations have been well run? That is my point.

High recurrent and development expenditures will cause medical costs to rise further. Hence, the paradox of a rising level of subsidies on the part of Government, and the rising charges paid by the patient. Sir, we do not object to the principle of making subsidised patients bear part of the cost. But the question is: can they afford the rise in charges? Since many MPs will speak on the question of affordability, I shall not dwell on this.

Suffice it to say that Medisave, with the present upper ceiling of $15,000, will not last a person's lifetime needs for hospitalisation. But before we think about raising the ceiling of Medisave further, we must have in place very well-guarded mechanisms for Medisave auditing and for professional auditing. Otherwise, the increased Medisave monies would be vulnerable to abuse by profit-making hospitals.

Also, there is right now some tendency among people to use multiple-Medisave accounts to settle bills. Although the present figures are low, yet if this continues as a trend, many people would have finished their Medisave accounts, and their family members' Medisave accounts. So I think we cannot over-emphasise the importance of watching the over-usage of Medisave.

As for the relationship between the public and private sectors, Sir, the National Health Plan specifically entrusted the Government to coordinate the planning and development of both sectors in order to achieve a better distribution of health services and avoid wasteful duplication. Have we succeeded in doing so? In the past few years, it appears to me that the Government's attention has been focused mainly on the restructuring of hospitals and the financing of health costs, and rightly so, because these things must first be put in place. However, we cannot ignore the developments in the private sector, not only because our resources are limited, population base is finite, but also because what happens in the public sector affects the private sector and vice versa.

In the past, there was a clear division of labour between the public and the private sectors. But with restructuring of Government hospitals, there is an increasing emphasis on cost-recovery and the line between the public and the private sectors has become blurred. The restructured hospitals are even said to be entering into competition with the private sector.

Sir, competition is a double-edged instrument. While it may goad the public sector onto greater efficiency and cost-effectiveness, yet fierce competition can also cause wasteful duplication and add to cost-inflation. This is because the market for medical services is imperfect. Patients do not have consumer sovereignty; specialists can create their own demand; and modern medical equipment is very expensive.

One particular example of wasteful duplication is the IVF programme. There are seven such centres now in Singapore. The procedures are expensive and the success rate is not fantastic. Even though we are to encourage procreation, yet how many people can actually benefit from the programme and how many babies have been born from IVF procedures? Besides, the procedures are such that there are higher risks of multiple births and underweight babies, and neonatal intensive care for underweight babies is very expensive. Are the IVF programmes at private medical centres well-equipped with neonatal units? Or has there been a tendency for babies with birth problems to be referred to the Government hospitals and are therefore more or less dumped onto the cheaper hospitals?

Sir, we must look into the question of the proper relationship between the public and the private sectors. The Government should concentrate on two important functions. First, to act as a dampener on the rise in costs in the private sector; second, to safeguard the quality of private sector medical services. With regard to the second point, MOH should think about checking the purchase of very expensive equipment in both the public and the private sectors, as well as restrain the practice of indirect advertising.

I feel very uncomfortable, Sir, with the large number of stories that come out in the press almost every week about the kinds of new acquisitions made by new medical centres and the wonders they can do. Although the names of the specialists who perform the state-of-art procedures are usually withheld from such reports, yet the names of the medical centres are identified, where it is said that these services can be obtained, sometimes even with telephone numbers. No doubt, this is a form of consumer information given by the press for the public's interest, yet the reports can be considered as indirect advertising in so far as the information is given by the medical centres themselves.

But having said that the Government should play a greater regulatory role vis-a-vis the private sector, I hasten to add, Sir, that the Government's attitude towards the private sector should not be just that of control. On the contrary, the private sector should be encouraged to grow, albeit responsibly. The Government should try to tap the resources in the private sector, and arrive at a better integration between the two.

As far as hospital restructuring is concerned, I have a few questions for the Minister. First of all, all the Members of the House are very happy that the Government has decided to re-install C class beds at SGH. On some issues at least, there is a possibility of a "happy ending".

The fact that SGH was allowed to have no C class beds raises one very important question in my mind. About three years back, the GPC was given to understand that the proportion between subsidised and non-subsidized beds will stay at 70% and 30%. Are the hospitals allowed to vary their bed complements at their own discretion? Has this philosophy been changed to one that, as long as the hospital provides "enough" subsidised beds, they will be allowed to have other kinds of beds as much as they could? There is a big difference between 70% and what is considered to be "enough" subsidized beds, because we know Medisave has caused people to opt for higher class beds. This tendency has been noted. So unless and until we are very sure that this tendency is not a temporary phenomenon, I do not think we should leave this formula of 70% and 30% to the discretion of individual hospitals.

A second related point is that, in upgrading the physical facilities of the restructured hospitals, we should be careful not to institute too great a difference in the physical facilities between the subsidised wards and the private wards. Because one problem faced by the subsidised patients now is the perception that the quality of medical care in subsidised beds is not as good as those in the private wards. If you accentuate the differences in the physical environment and the physical facilities between the two classes of wards too much, you would accentuate the tendency for the subsidised patients to think that the quality of medical care in the private wards is in fact better. This is not true and it leads to further enhancement of the preception, which would not be desirable.

Thirdly, with the development of specialties and sub-specialties among the restructured hospitals, there is a rather clear division of labour emerging. What the Member for Ayer Rajah raised last year with regard to the problem faced by patients in terms of transfer between restructured hospitals, is worth looking into. The Minister needs to assure the public that, with the specialisation amongst restructured hospitals, patients will still be transferred without much problem.

Fourthly, with the restructured hospitals going for cost recovery and with the institution of the specialist consultancy fee scheme with no income ceiling, I think there may be some adverse effects on the teaching of medical students on medical research, and also on the care given to subsidised patients. I would like to ask the Minister what mechanisms has he instituted to ensure that the quality of teaching, research and the care of subsidised patients at the restructured hospitals, including NUH, has not been compromised. In his opinion, is the formula 4:7 sessions enforceable, ie, four sessions for private patients and seven sessions for subsidised patients?

Mr Heng Chiang Meng (Cheng San GRC): Sir, last year, I brought up figures to show that while we are allocating much of our resources to defence, we are giving insufficient amounts to health care. This point has once again been brought up in this Chamber during this sitting and so I would not belabour the point. However, I do want to say that the Government's policy on this issue appears to be pushing health care expenditure more and more to the direct consumers, that means, those who use it rather than as a general service to the population. In doing so, the Minister has been at great pains to stress that such a policy would be done within the people's affordability to pay. It is well and good, but I believe health care should and must be a key priority of any government, including this Government. And that the level of subsidy in this area must also depend not only on the people's ability to pay but also on the State's ability to subsidise.

Sir, given our healthy financial position, surely we can afford to increase our subsidy to ensure a more healthy population, regardless of wealth and age. The issue, as I see it, is really political. Is it not worth our while to increase our health care budget from about the present current rate of 1% of the GDP to perhaps 1 1/2% of the GDP?

Sir, the expenditure on education has already taken a great leap forward in the programmes that are being planned and put forward by the Minister for Education. I suggest that the Acting Minister for Health perhaps see him for some advice in this area.

Sir, while average Singaporeans by their income and their ages may be comfortable with the Government's current philosophy on health care policies in that they want higher standards of medical expertise, care and service and can afford the higher fees, we must remember that, unfortunately, in our midst there are the older and the poorer who may be adversely affected. When costs are high and they spread to the family and the community, unfortunately, the sick and the old become more burdensome. And ageing gracefully and with dignity then becomes more difficult. True, the Minister has repeatedly stressed that no one will be deprived of medical services because of lack of affordability. However, there is an issue of stigmatisation. Means test may prove to be demeaning and demoralising, especially so within the context of our Asian cultures. The result may be unintended deprivation. Hence, I would like to suggest that if the health care share of the budget is increased, or even if it is not, that more should be allocated to the aged, to the chronic sick and to the poor.

Sir, my other two cuts on sports and recreation and preventive health care and health enhancement have already, I believe, been covered somewhat under the Ministry of Community Development and I will not go into them, except to ask for more emphasis to be given to the specialisation of sports medicine. Unfortunately, when we encourage the whole population to take up sports and recreation, we also increase their chances of sports injury and perhaps specialisation in this area with due recognition given by the Ministry of Health will be something that we can look forward to.

On other cut on manpower shortages in medical support services, I have just a few points to make. There are right now, I believe, overall shortfalls in Government hospitals, excluding the restructured hospitals, Singapore General Hospital and the National University Hospital, as at the end of last year. In the category of nurses, there is roughly about 20% shortage; physiotherapists, 50% shortage; occupational therapists, about 40% shortage.

Sir, again last year, I understand that the rate of resignation exceeded the rate of recruitment for all these grades of staff. My questions to the Minister are: How is the Ministry going to address these acute shortfalls? Are there any measures that have been taken to reduce the high rates of resignation and, of course, his honest opinion whether these high rates of resignations are due purely to salary levels and not to some other reasons?

Dr S. Vasoo (Tiong Bahru GRC): Sir, I would like to register my concern about accessibility of health care to the working class, particularly the lower income group. The increasing cost of health care is a hot topic of discussion amongst members of the public. Many are concerned about the steep increase in ward charges. Those in the lower income group are becoming more worried that health care will become less affordable. Sir, their worry is real.

The Class C inpatient average bill size has increased significantly. In 1980, Class C inpatient average bill size was $46 in Government hospitals and $57 in Singapore General Hospital. In 1986, Class C inpatient average bill was $157 in Government hospitals and $178 in Singapore General Hospital. As can be seen, Class C bill size has increased about three times over the past period of six years.

Sir, in the 1990s when all hospitals are restructured, the Class C average bill size is likely to go up significantly. And this will be the case because there will be less Class C wards in the various hospitals. This will certainly create a burden to people in the lower income group in terms of their need for health care.

It is important to note that as at 1988, 19% of them have Medisave balances below $5,000. Such low Medisave balances can be wiped out by just one hospitalisation in the Singapore General Hospital. This is indeed a grave concern that eventually people will have less Medisave balances available to meet their health needs.

Sir, given the small Medisave balances among the lower income group, we must be aware of the likely consequences that may arise. First, without the retention of C class wards in all restructured hospitals, we will in future see an increasing number of people defaulting on payments of hospital charges. Second, the low income group will delay in seeking hospital treatment until their health condition becomes worse and this is the case because people with less income will protract in seeking admission. This will mean that it will cost more to treat conditions which become more complicated.

Third, we have beautiful and good restructured hospitals, but these are likely to become less accessible to those who cannot afford. Sir, we must take steps at this stage to avoid various problems from happening. The first step I like to suggest is to set aside 10% of beds in all restructured hospitals for C class patients. In this respect, I would like to find out from the Acting Minister what percentage of C class beds would be set aside in all restructured hospitals.

Sir, the other step that we can take is to implement C class beds in Singapore General Hospital before the end of 1990. The Singapore General Hospital has a long past history in having C class beds. Therefore, I see no necessity for the Acting Minister to delay implementing it. He should in fact do a radical surgery to reinstate C class wards in Singapore General Hospital.

Mr S. Chandra Das (Cheng San GRC): Transplant!

Dr Vasoo: Maybe a transplant, if possible. Would he do the surgery very soon and not postpone?

Sir, Government should in fact increase the allocation of funds to health care. I would like to urge the Government to review this and I like to restate that 1.1% expenditure of our GDP on health is rather meagre and small, and I think there is a case to increase this.

Finally, Sir, it is necessary to ensure that the services of medical consultants are actually available to C class patients. I would like to find out from the Acting Minister how much time do these medical specialists provide consultations to C class patients.

Mr Peh Chin Hua (Jalan Besar GRC): Sir, medical care has been an important concern of every Singaporean. With the development of Singapore's economy, medical service and technology have advanced tremendously in recent years. This has benefited all Singaporeans and the life span of individuals has increased because of the advance made in medical sciences. However, as our medical facilities and treatment improve, we must ensure that the small proportion of people who are poor are not deprived of their medical benefits. Therefore, besides the need to provide more C-class wards by the Government, we should also ensure that senior specialists or consultants extend their services to C class patients who are seriously ill as well. This would definitely benefit the lower income groups who could enjoy better medical facilities.

Under the present system, patients in class C wards are taken care by doctors in that ward. The concerns expressed to me are that if a patient wishes to be taken care of by senior specialists or consultants they have to give up their right of stay in class C and transfer themselves to class A or B. Such a system, if true, must create unhappiness among the family members of the C class patients who are seriously ill.

Many of them do not understand why class C patients cannot request the service of senior specialists or consultants from class A and B for treatment or operation if they still insist to stay in class C ward. In actual fact, they would prefer to have better medical treatment rather than better ward facilities.

We believe that many Singaporeans still preserve their oriental tradition and they are family-centred. They will try their best to save up their money for medical treatment or operation expenses for their family members, but not expenditure for better wards because this will create more burden to them.

Sir, we all know that all guests in the hotels are allowed to have their meals in the restaurants, coffee-houses and the night clubs, and to use the facilities provided irrespective of the kind of rooms they are staying. I therefore urge the Government to adopt the same policy as practised by the hotel, ie, to allow class C patients to be treated by the senior specialists or consultants.

Of course, there must be safeguards. It is understandable that every patient, irrespective of whether he is in A, B or C class or whether his condition is serious or minor, would like to be treated only by the most senior specialists or consultants. If this happens, then the queue for the most senior consultants must become very long, and patients may have to wait many months. Those not seriously ill can afford to wait, but those who are seriously ill cannot wait. Therefore, I would like to suggest that patients be treated according to the seriousness of their condition. Those C class patients with complicated or serious conditions should be treated by the senior specialists or consultants, if requested by the patients themselves.

Finally, I sincerely hope that the Ministry of Health will consider my above proposal and to clarify to the lower income group to avoid misunderstanding that senior specialists and consultants are only meant for the better paid wards, namely, A and B wards.

The Chairman: Mr Peh, your time is up.

Dr Wan Soon Bee (Pasir Panjang GRC): Sir, in Singapore we have a good health care system. The programme is comprehensive and the standard is high. It is comparable to the best in the world. Singaporeans are aware of this tremendous progress we have made in the area of public health care over the last 25 years. They are proud of our achievements.

Sir, we are continuously pushing for excellence in medical care and greater efficiency in our medical services. There is absolutely nothing wrong in the pursuit of excellence and efficiency. But we must not forget that the ultimate aim of a good health care programme is to serve the needs of the people. No matter what we do, whether it is the restructuring of the Government hospitals to achieve greater efficiency or the new incentive schemes for the senior doctors in order to retain them in the Government hospitals, the Government must make sure that every Singaporean, no matter how poor, can take advantage of this excellent medical care. We would have failed in our duty towards the people if a significant portion of our population finds that this excellent medical care is beyond their reach. This is why the Government must ensure that medical cost never becomes so prohibitive as to prevent or discourage people from seeking medical care or so high as to plunge lower income families into chronic poverty if they do seek medical care.

Sir, over the last few years the cost of medical care has been going up. This could be due to inflation, higher wage cost, better equipment and facilities, better ambience and comfort. Whatever the reasons are, the people are feeling the pinch, especially those in the lower income group. The people believe that the cost has escalated further with the restructuring of the Government hospitals and the removal of an income ceiling for senior doctors. The people are now very concerned. This continuous rise in the cost of medical services and the process of restructuring the Government hospitals have drawn adverse reactions among both the members of the public and the medical profession.

Perhaps it is time we reviewed our medical care programmes to see whether some of the costs are necessary and justifiable. Perhaps we should ask ourselves whether we have been spending unnecessarily on expensive equipment, and whether our doctors have been too liberal in performing medical tests and whether we are now running our hospitals in a most cost effective manner. If the cost has to go up, I do agree that it is unfair and unwise to expect the Government to shoulder the entire burden. Some of the burden has to be shifted to the consumer. But I want to appeal to the Minister to give special consideration to lower income families.

Sir, I think it is not correct to concentrate merely on the level of subsidies. The question of affordability must be carefully looked at. It is important to review the question of affordability because health care is not a choice. It is a necessity. The only way a poor person can avoid spending the enormous amount of expenses when he falls sick is to neglect his health and this is not acceptable. It will be futile to point out that the subsidy for C class beds is at 82%, if even at this level there is a significant proportion of the population who cannot afford or find it difficult to afford health services. In such a scenario, health care would not be affordable to the lower income group despite the high level of subsidy.

It is also wrong to assume that medical services are affordable just because the number of waivers of hospital bills per annum is small. There could be many reasons why people do not apply for waivers. First of all, the criteria may be too stringent. Secondly, people may feel embarrassed to apply for waivers. Thirdly, they may be too ignorant and scared to apply for it. We must not allow those Singaporean households on the borderline of poverty, if one of their families falls sick, to either neglect their health or to sink into poverty if they do seek medical services. We must ensure that should the need arise these families will be able to receive our excellent medical care without fear of sinking into abject poverty.

I am happy to note that the Ministry has responded positively to the request for re-implementation of C class wards at SGH. This is indeed welcome news and I should like to add further that I hope C class beds will be retained at all restructured hospitals. On the question of restructuring Government hospitals, one issue still crops up, ie, the belief of many people that restructuring is in effect privatisation. The aim of restructuring is to enable hospitals to be autonomous, freeing them from the constraints and bureaucracy of civil service. It is hoped that this will enable hospitals to be run more efficiently and thus lower cost in the long run. The people must be made fully aware of this objective. The notion that restructuring means privatisation must be dispelled once and for all. People must also be made aware that the benefits of restructuring will be reaped in the long run. Greater efficiency and lower cost in the long run are intangible benefits which the people do not see at present. What they do see are the tangible effects which have the greatest impact on them, and that is increased cost.

Sir, I would like to reiterate that we must subsidize medical care at the level which is affordable to the lower income families. Sir, there is no fear that we would be become a welfare state by answering to the needs of this lower income group. We would merely become a more caring, concerned society. People do not go into hospitals for the sheer pleasure of it. So there is no fear of abuse.

Mr S. Chandra Das (Cheng San GRC): Sir, I have only two questions for the Acting Minister for Health. Most of the points have already been raised by my other colleagues.

Firstly, Sir, with the cost of medical care on the rise, and this will continue to rise, particularly with advances in technology and demand for medical services, I am just wondering whether the Acting Minister for Health can prevail upon his colleague, the Finance Minister, to provide more than 1% of GDP for purposes of health. Sir, we are in a position today where we can definitely spend more than the standard 1% which has been fixed. I think the Acting Minister for Health should work a little harder and try to get this increase above the 1%.

Sir, my second question to the Minister now concerns individuals. Whilst Government needs to provide more, I think individuals themselves must bear some of the increase in cost and I would like to ask the Minister whether there are any plans to increase the CPF contributions in the Medisave account.

Mr Choo Wee Khiang (Marine Parade GRC): Sir, thank you for allowing me to join in.

Earlier on, other MPs spoke about affordability in terms of dollars and cents. I would now like to talk about something which is non-dollars and cents. Sir, people in the caring profession need two critical characteristics to put the health service in Singapore as one of the best in the world. These are competence and compassion. In terms of competence, we have some of the most competent doctors and nurses in the Asia Pacific because of our rigorous training programmes and continuous efforts put in by the Health Ministry in achieving medical excellence. However, Sir, as far as compassion is concerned it is in short supply. Sick patients are very taxing to look after. However, a smile, a gentle word of assurance, a voice devoid of irritation, together or singly, go a long way to calming the anxiety of patients and their family members.

Many of our doctors and nurses have also lost the act of touching the patient by the hand or shoulder. This is indeed a powerful way of demonstrating care and concern. If competence requires years of training, how much attention are we paying to training for compassion? The latter, if practised, would certainly contribute to the much touted quality of life. There is a Chinese saying: Yi cher fu mu sin and I sincerely wish the Minister will look into this matter so that our medical care can be further enhanced.

Sir, as far as a children's hospital is concerned, I mentioned it last year and I would like to bring it up again this year. I quote briefly in Mandarin what I said last year.

(In Mandarin): Last year ---

The Chairman: Are you making another speech or are you just quoting?

Mr Choo Wee Khiang: I am giving a quotation, Sir.

The Chairman: All right, just the quotation.

Mr Choo Wee Khiang: Yes, Sir. It is not a very long quotation.

(In Mandarin): Last year I mentioned that we should let the children who stay in the C wards enjoy free medical services, but the Minister refused. He said that it does not fit the Government's policy. Govern- ment encourages people who can afford to ---

The Chairman: It seems to me it is a rather long quotation you are making.

Mr Choo Wee Khiang: It is finishing. Two more sentences and it will be completed, if you will allow me, Sir?

The Chairman: All right, two more sentences.

Mr Choo Wee Khiang: Thank you.

(In Mandarin) But the Minister forgets that poor parents also have children and they find it difficult to pay for the hospital bills ---.

(In English) Sir, let me remind the Health Minister ---

An hon. Member: You are translating.

Mr Choo Wee Khiang: No. That is not a translation. I think we have a simultaneous interpreter up there.

Sir, we have given a lot of incentives to younger couples so that they can have their babies early. But I feel that if we do it this way, it is only going to benefit higher wage earners. In order to show care and concern for those lower income group couples, I really feel that we must give free medical services to all C class patients in the children's wing.

Dr Aline Wong mentioned about IVF, and I would like to ask the following questions. What are the capital and maintenance costs of our IVF centre and how much revenue does the centre generate per year? Is there a net gain or net loss by running such a centre and what is the percentage of patients who are non-citizens?

I would also like to, ask about the restructured hospitals in terms of staff shortages. Mr Yeo Toon Chia raised a few days ago about the number of existing staff - medical, nursing, administrative, pharmacy staff - who have joined the restructured hospitals, especially in Kandang Kerbau Hospital and Toa Payoh Hospital. I would like to know how the Ministry will ensure that these hospitals function with sufficient staff and how many posts are now vacant.

Sir, now that doctors are allowed to receive more than 60% of their salaries as consultancy fees, I would like to know how the Ministry will ensure that doctors are not spending too much time earning money and too little time teaching medical staff, nurses, etc, I would like to know whether the Ministry has some kind of monitoring system to monitor this aspect, and also whether these specialist doctors are now doing less research work or publishing their academic papers.

I would urge the Minister to consider taking one step at a time in terms of restructuring our hospitals. For example, let Alexandra Hospital remain as a Government hospital. And I would like the Minister to make sure that all the facilities and resources among the hospitals are available to all, and give every hospital a fair chance of having highly skilled specialists.

The Chairman: Order. It is time for the tea break.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at five minutes past Three.

Sitting accordingly suspended at 2.35 pm until 3.05 pm. Sitting resumed at 3.05 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head P - (cont.)

Dr Ow Chin Hock (Leng Kee): ( In Mandarin): Sir, from the point of economics, the expenditure on medical and health care, like the expenditure on education and public housing, is part of the Government measures in the re-distribution of wealth. With the Government's subsidy, people in the lower income group are also able to make use of our medical services. The subsidy in medi- cal and health care is the Government's obligation to our people. However, subsidy in medical and health care is not entirely a consumptive subsidy because a healthy workforce will necessarily mean less losses in working days.

However, recently, there is a popular saying among our people that "if you have no money, you just cannot afford to be sick." This saying could have originated from a biased view, misconception or misunderstanding of our people. However, some of the measures taken by the Ministry of Health in recent years have further enhanced this impression that one could no longer afford to be sick. These measures include the restructuring of hospitals and the reduction or abolition of Class C ward beds. The restructuring of hospitals is aimed at making the management of hospitals more effective and flexible to cope with the trend of ever-increasing medical cost. However, with the restructuring of the hospitals, hospital charges are increased, Class C wards are abolished or the number of C-class beds is reduced. These make our people feel that the charges are increased because of the restructuring of the hospitals, and the hospitals are restructured because the Government does not want to bear the subsidy on medical and health care. With the restructuring of the hospitals, we have yet to see any advantage in it, but we are already seeing its disadvantages. This is why many people have a misconception about this plan.

The Medisave scheme is a very good scheme whereby our CPF savings can be used to defray some of our medical expenses. However, our people generally do not have a clear idea of the various rates of charges for the various classes in our hospitals. In other words, there is a lack of price information among the consumers. There are two Psychological factors: (1) making use of our CPF savings is certainly easier than taking the money out from our pockets; (2) spending money on ourselves or on members of our family to alleviate the pain and suffering of one's illness by getting the best medical care and treatment is a matter of course. Therefore, the higher the class of ward the better it is. As such, the number of hospitalisation cases has been rising over the years, and there is a shift of demand to private hospitals.

The demand for hospital wards has also shifted from Class C wards to Class B wards, or even Class A wards. As a result, some one-third of the Class C beds were unoccupied, while the Class B beds are insufficient to meet the demand. Not many people note that the average saving in Medisave accounts is not as high as many people would want to believe. In 1988, the average balance was only $3,182. The increase in demand, both qualitative and quantitative, is certainly increasing the burden of the Government as well as the family.

In fact, the Government's subsidy in medical and health care has been increasing over the years. In FY 1987, the subsidy on recurrent expenses was 60.3%. In 1988, it was increased to 63.8%. The average per capita medical subsidy in FY 1989 was $194. In FY 1990, it is estimated to be $220. Therefore, the saying that the Government is reducing its subsidy on medical and health care is truly unfounded. However, in order to convince the people, and to win over their cooperation, may I suggest the following:

Firstly, the Ministry of Health should slow down its pace of restructuring Government hospitals. While we are restructuring the hospitals, we must retain some Class C wards. While we are striving to achieve efficiency, we should not neglect our people's concern for equity. So even if the Class C wards are not fully utilised, they are not a waste. This is a price the Government has to pay in order to convince the people the need for the restructuring. Moreover, in the sphere of redistribution of wealth, you cannot use efficiency as a criterion for everything.

Secondly, through the hospital and the mass media, we should provide more information on the hospital charges and other information so that our people will know how to make use of their Medisave accounts effectively, so that they may not over-spend and prematurely exhaust their Medisave savings meant for the days when they are old and prone to illnesses.

Thirdly, I am very glad to note that the Ministry of Health will be starting the MediShield scheme from 1st July this year. However, I would like to suggest to the Ministry of Health that the insurable age limit be raised to 70 or even 75 years, because the older a person is, the higher is the possibility of his being hospitalised. In future, Sir, you will realise it. If we increase the age limit, we should be able to take care of more of our elder citizens and to reduce the medical burden on their families. And this will go a long way to show the Government's sincerity in this direction.

The last point is that more attention should be paid to basic health care and medical services for the people, as prevention is better than cure and also we could save in the long run. In FY 1990 budget, the total expenditure is estimated to be $77.7 million and this represents an increase of 21% over the FY 1989 figure. Yet, it is only 13% of the total expenditure of the Ministry in FY 1990, while the redevelopment cost of SGH is $262 million which is 3 1/2 times more. Should the Ministry of Health not channel more resources to primary health service rather than to the renovation of hospitals? Also, I suggest the Ministry of Health should have more publicity on TV and through the mass media on our primary health care programme for school our people, old and young, so that they will know what are the services available to our people which are free or at low fees. In a world which emphasizes on publicity and self-promotion, we have to sometimes publicise ourselves so that our people may know what the Government has been doing for them in our primary health care programme and in the field of medical services.

Dr Lee Siew-Choh (Non-Constituency Member): Mr Speaker, Sir, Government often speaks of subsidies for health services. It must first be made clear that Government has not given subsidies to anyone. Government has no money of its own to subsidise anyone. The so-called subsidies are in fact taxes collected by Government from the people and spent by Government for services which it knows the people require and need. In the case of health services, Government speaks of so-called subsidies for the poor and the sick who need hospital care, especially those in Class B2 and Class C beds which are utilised mainly by the middle and lower income groups. The PAP philosophy of Government is that Government is not responsible for the welfare of the sick. The PAP believes that the sick should be made to pay for his own health when he becomes sick although he might have toiled and laboured all his life for the prosperity of Singapore.

In Singapore we have the funds and plenty of it. But the Government prefers to use the funds to build huge complexes and offices for Government departments and, of course, to help the rich. It calls our society affluent and pretends that the poor in our midst does not need much help. Whether or not Government helps the poor is of course all a question of social conscience and a question of political will. If the Government has a social conscience and a political will to help the poor, the funds will be forthcoming.

The people have elected the Government to look after their welfare and they have a right to use health care services for the people provided out of Government funds. Government should therefore rethink its priorities. More funds, much, much more, should be spent on so-called subsidies or subventions for health services. I suggest therefore that, to begin with, the present fees and charges for B2 and C class beds where they exist should be drastically reduced. The number of C class beds should also be imcreased and their quality improved. That is what Government should do immediately. More funds should be allowed for such health care.

Presently, Government has plans for Medishield which solves only part of the problem. But if we aspire to excellence in health services, then we need to have a comprehensive National Health Plan, somewhat similar to that in Britain. The quest for excellence should not be confined to being No. 1 in port or telecom services. A more important measure is the general health of the population and how well we look after the sick and the aged. Present allocations for health services are totally inadequate. It represents a mere 1% of GDP in comparison, to 6% for defence and only 4.4% of the total budget expenditure, in comparison to 26.5% for defence. Allocations for health service should in fact be doubled at least. I hope the Government will give serious consideration to what I have just said.

Government aims to achieve certain objectives with the restructuring of hospitals. But has restructuring achieved excellence in health services for the people? The answer is a big no. It is true that hospital services by nurses and staff have improved and there is generally a shorter waiting and queuing time for all concerned. Government may well achieve its objective to have effective control over the running cost of the Singapore General Hospital. But for the lower income and the poor, it is a different story. they have not benefitted at all.

The introduction of the profits system into hospitals may also benefit some doctors. But the poor patients who are sick and are forced to seek treatment in hospitals are now made to pay and pay. Restructuring has also introduced a double standard of hospital care - one standard for the rich and one for the poor. The sick are now made to pay extra in many ways - in hospital ward charges, in consultation fees, in investigations fees, in expensive operation fees, and whatnots. But apart from the sick having to pay more for essential medical care, there are also other unsavoury features of the restructuring of hospitals. Since the General Hospital is now wholly profit-orientated, doctors working in the General Hospital, like those in the NUH, must necessarily be affected by the new system in some ways. The Straits Times on 18th January 1990 and 7th March 1990 have highlighted this issue of disparity of incomes between physicians and surgeons. I need not dwell on this.

Has restructuring and the new system managed to retain good doctors and staff and prevent them from resigning? The answer is again no. A few specialists have again recently resigned although they could have made much more money if they had stayed inside the hospital, making use of the facilities there and the staff to help them. This only shows that earning higher income is not necessarily the only reason why doctors in hospitals sometimes decide to resign and go into private practice. There are many other equally important considerations, like dedication, care for the sick, research, that motivate doctors in hospital services.

The profit-orientated system in restructured hospitals has also adversely affected the teaching of medical students and training of junior doctors and staff. Complaints have been made that teaching time has been cut short for students and junior doctors and staff because of the heavy workload of teachers. And seeing how profit-orientated our present system is may well influence our students to opt for lucrative disciplines after graduation with the result that certain non-lucrative disciplines, like research, general medicine and other medical services, may well become understaffed in future. All this does not augur well for the health services in Singapore.

The PAP has been infected with the privatisation bug. It measures excellence on the basis of how much a person earns, not on the quality of the services and the benefits they bring to the people. PAP's quest for excellence in health services means having the most modern high-tech and expensive equipment manned by a group of doctors made available to serve patients from countries around Singapore and some of those in Singapore who can afford to pay the high cost in fees and charges, but not the vast majority of the people in Singapore. Therefore, how do our people really benefit? In view of the grave distortions and baneful results privatisation of hospitals has evidenced so far, I ask the Minister what steps will the Government take to put matters right and bring affordable, efficient health care services to the people of Singapore?

Dr Arthur Beng Kian Lam (Fengshan): Sir, I would first like to declare pecuniary interest in that I am a medical practitioner.

Sir, the first part of the mission statement of the Ministry of Health reads thus:

'To provide a comprehensive, modern, and efficient health care service to all Singaporeans who are in need of medical treatment ...'

It is in this context, Sir, that we should see the restructuring of the Government hospitals. Has restructuring of the hospitals helped the Ministry of Health reach this noble aim of this mission statement? Sir, we should seek the answers to several questions.

(1) How has restructuring progressed?

(2) What are the successes and failures of the restructuring of the first three hospitals, namely, SGH, NUH and the National Skin Centre?

(3) What is the direction that restructuring should take?

(4) Should all hospitals be restructured?

These four questions are also somewhat inter-linked. We await the Minister's reply to these questions. If I may, Sir, I would give my own views on some aspects.

How has restructuring progressed? As far as the provision of improved physical amenities and better and modern (state-of-the-art) equipment, one cannot doubt that restructuring has achieved these aims. One only needs to look at the Accident and Emergency Department of SGH to realise this. This is a paradise compared to the A&E Department of the 1970s. I remember my own days as a Medical Officer in the A&E Department of Toa Payoh Hospital. There was no observation or treatment room. Resuscitation equipment was shared by the whole hospital, and the greatest nightmare for the doctor was that after 9.00 pm, X-ray services were no longer available routinely. If the doctor wanted an X-ray, the radiographer had to be summoned from his home.

Another area of dramatic improvement is in the care of the very ill. Previously, all ill patients were put into a common intensive care unit. Now there is the Coronary Care Unit, Medical Intensive Care Unit, Surgical Intensive Care Unit and other specialised units. These are all moves in the right direction. In this sense, the Ministry of Health is one step closer towards achieving the Ministry's mission of providing a "comprehensive, modern, and efficient health care service."

The environment of the restructured hospitals is definitely more conducive to both patients and staff alike. The improvements, however, have been achieved at a great cost and this has to be passed on to the consumer, ie, the patient. The affordability issue thus arises. My colleagues have addressed this and I will no longer dwell on this any further.

Sir, instead I would like to spend the next few minutes on the direction which I feel restructuring should take. Sir, the NUH, SGH and NSC are all "5-Star hospitals" with "5-Star" physical structures, equipment and, of course, also "5-Star" charges. My proposition to the Minister is that there is no need for all restructured hospitals to go in this direction. My perception of NUH and SGH is that in addition to providing the services of a "5-Star" hospital they are also aiming to provide medical services at the tertiary level and beyond, ie, they are going into super-specialisation. This, of course, makes the cost of maintaining the hospitals extremely high. The other general hospitals to be restructured, Toa Payoh Hospital and Tan Tock Seng Hospital need not follow this same approach.

Toa Payoh Hospital and Tan Tock Seng Hospital should aim to achieve excellence at the level of secondary health care, and for physical ambience, aim to achieve that of, say, a "3-Star" hospital. This, I emphasise, is not a second class hospital or an inferior hospital, but one that aims to achieve excellence for secondary health care. This would make good hospital care at an affordable cost readily available. For example, if a patient has a heart attack, it would be sufficient if he is monitored and treated at the secondary level. Then if he requires further investigation and/or cardiac surgery, he could be managed later at NUH or SGH. Likewise, if a patient has an abdominal cancer, he could be operated at Toa Payoh or Tan Tock Seng Hospitals and for specialised radiotherapy or chemotherapy, this could be done at NUH or SGH. This is the present practice, and this should continue after restructuring to avoid expensive duplication of equipment and staff. As a small country, expensive duplication does not make sense.

Next, Sir, I would like to address the manpower aspects of the restructured hospitals. Under the present system, administration is centralized at the Ministry. With restructuring, each hospital will have its own team of administrators, medical director, accountants, health economist, etc. Will this make for a more cost-effective or a more expensive system? We have often heard of the advantage of "economy of scale" in the control of the Ministry of National Development. In the Ministry of Health, however, there seems not much emphasis on this. Are we not being too extravagant in having a whole new generation of people, with fancy titles, who are supposed to form the core of people called health administrators? Are we not falling into the pitfalls that the American health care industry has fallen into? Will the Minister review this trend? I hope that what this House has set aside for health care will go into the business of caring for patients and not for maintaining extravagant and expensive infrastructure.

Sir, I would like next to turn to staff morale. If restructuring has been successful in looking after the interests of staff, one should see a slow down in the resignation of staff. Has this actually happened? Instead, we are constantly hearing of staff shortages and resignations. Is this fact or fiction? The Minister may like to comment.

I would like to bring one specific problem to the Minister's attention. This is the problem of the specialists retaining their quota of specialist allowance. This has led to several problems:

(1) The more junior specialists are complaining that they have little chance to manage cases as the Senior doctors fill up their own quota of fees first before handing cases to the more junior doctors.

(2) A sense of despondency in the non-surgical discipline, as the surgeons, I am told, can earn as much as 300% of their basic salary. What about the physicians, pediatricians and other para-clinical support staff?

Let us remind ourselves that the management of a case is not a "one-man" show. It is not only the surgeon who operates who manages the patient. What about the medical officers, the nurses, the operating theatre ancillary staff, the laboratory technicians, etc? Do they not also deserve a share of the "cake"? Perhaps a system of cost centres should develop for each department within the hospital. Then only will it be realised that the successful hospital is a successful team that has evolved, and thus, the cake should be shared. The surgeon, of course, can remain to be the "prima donna" receiving the largest slice of the cake. This disparity must be addressed now. Unless we develop the hospital as a complete unit, excellence cannot be achieved.

Finally, I would like to address the speed of restructuring. Should we not now take stock before proceeding further? What is the urgency? Should we not at least maintain one hospital, upgrade it, and see how this hospital can compete with the restructured hospitals? If the compass points to the direction of restructuring after stock-taking, then by all means, proceed.

Sir, I would like now to turn to primary health care. Sir, primary health care or the early detection and management of disease is the best insurance for the reduction of expensive curative medicine. To go one step before this, health education and health promotion is equally important.

I am glad to note that the Ministry last year conducted three nation-wide public health education programmes: Nutrition Week in April, Dental Health Week in July, and the National Health Fair in October. The National Health Fair, in particular, was an overwhelming success with more than 400,000 persons visiting the Fair. I would like to ask the Minister whether his Ministry is planning to have a permanent Health Exhibition Hall, maybe in the Science Centre, for students to visit. What are the other public health programmes planned for 1990?

Sir, I would refer next to the polyclinics. There are constant complaints by patients of having to wait for hours before being attended to. Doctors are complaining of near-impossible workloads. What is being done to alleviate the situation?

The Chairman: Dr Beng, your time is up. Dr Tan Cheng Bock.

Dr Tan Cheng Bock (Ayer Rajah): Sir, I would like to declare my interest. I am a private medical practitioner.

Sir, I refer to Dr Aline Wong's query. These subvention grants of $72 million to SGH and $22.9 million to NUH, how are they derived? What are these grants for? And rightly pointed out by Dr Aline Wong, why the increases?

Public funds were used to fund and upgrade these hospitals. They are therefore accountable, yet the data presented do not reflect the workload and performance of these hospitals. If you look at hospital admissions, you will notice that there is a drastic fall from 219,603 for FY 85 to 87,000 for FY 1990 (projected). Surely this drop in hospital admissions cannot be so drastic, unless data of hospital admissions from the Government privatised hospitals and NUH have been omitted. Anyone not familiar with these changes would have congratulated the Minister for cutting down hospital admissions, which is the performance indicator of a successful health care delivery system. I think such data and others must be reflected in the Ministry of Health's budget, as long as this House's approval is being sought for grants.

Singaporeans question why these hospitals are given grants and yet unwilling to have C class beds, for example, SGH and NUH. The grants given to these hospitals, as I said, must therefore be accountable, and much of it must go to the subsidy of the C and B2 beds. It should not go to promote these hospitals as super-special hospitals.

I understand Toa Payoh and Tan Tock Seng Hospitals are being restructured. I want to know the number of B2 and C class beds in these two hospitals and the subvention grants to be given, as compared to SGH and NUH. This is important. Because my fear is that if the grants are less than adequate, then I think the hospitals concerned will be reluctant to service subsidised patients. With the SGH and NUH given all the full publicity as centres of medical excellence, I foresee that the other restructured hospitals are being forced to join in the rat race for medical excellence. Sharing of facilities no longer exists among the competing Government privatised hospitals. These hospitals will have to come up with their own programmes, probably duplicating each other. For example, I am sure you will get laser treatment for gall bladder, surgery of unborn foetuses, as well as frozen egg, IVF, GIFT programme, open heart surgery and special eye centres, etc, etc. What do all these lead to? Higher expectations, demand and increased health costs. For those who can afford such services, it will mean more choices. But for the majority, this is going to be a problem. Any hospital administrator will demand and expect the hospital staff, including doctors, to show cause why their departments are not making money. This would lead to unhealthy medical practices and an increase in unnecessary medical and surgical procedures.

The Government must retain at least a few hospitals from being restructured, because the day will come when Medisave runs dry and demand for C and B2 beds will go up. These hospitals will then serve basic medical and surgical needs. My personal belief is that the Government must not go and compete with the private sector in this area. It must provide the general population with basic health care, and leave those who can afford hotel-style hospital care to the private sector.

Sir, at the rate the Ministry of Health is privatising the Government hospitals, a day will come when this Committee of Supply's discussion on the Health budget would take a few hours, instead of two days. By then, you need not impose this 4-minute limit on us.

Finally, I want to ask the Minister three simple questions. How is it that the cost per outpatient treated at the Outpatient Department went up by 64% from 1985 to 1990, compared to a 19% increase in the cost per inpatient at the hospitals over the same period? Outpatient treatment is simple and less intensive. Yet the cost has gone up so much more than hospital inpatient, with all the expensive and intensive care. Is there a cross-subsidy?

Second question: why is it that home visits to elderly have come down when the elderly population is on the rise? I would expect more morbidity in this area.

Lastly, I would like the Minister to define "accident and emergency unit". What is a non-emergency unit doing in an accident and emergency unit?

Dr Wong Kwei Cheong (Cairnhill): Sir, I would like to ask the Acting Minister if we have enough trained medical personnel to help Singapore develop into a Medical Centre of Excellence. I understand the intake of medical students to the National University of Singapore was maintained at 200 from 1982 to 1985. However, since 1986, the intake has been decreased and may even be reduced to 150 this year. Will the decrease in the number of medical students being trained compromise our manpower requirements and therefore adversely affect our drive towards excellence?

In 1989, the doctor to population ratio for Singapore is 1:791. In comparison, the ratios for other developed countries are as follows: West Germany, 1:400; United Kingdom, 1:667; Japan, 1:667.

As the standard of living in Singapore is rapidly approaching that of the developed countries, it is clear that we do not have enough doctors to serve our health conscious Singaporeans. I am afraid, Sir, the decrease in medical students being admitted to the National University of Singapore will compromise our manpower requirements, and further raise the doctor to population ratio, and will adversely affect our drive to excellence. May I ask the Acting Minister what is the ratio that the Government has targeted to ensure that Singaporeans have easy access to good medical care?

In the 1986 report of the Economic Committee, it was recommended that the Government must further encourage the development of private medical facilities, particularly in specialist medical services. May I ask the Acting Minister for a progress report on development in this area, particularly the kind of specialist medical services that have been introduced into Singapore since 1986? Moreover, do we have enough specialists who can diagnose and treat complicated cases faster and more effectively? I would also like to ask the Acting Minister what his Ministry is doing to ensure more medical specialists are being trained.

Many private hospitals have already set up branches in Singapore. In 1989, it was estimated that private hospitals delivered almost half of all babies in Singapore. Yet, they do not have neo-natal intensive care units, and seriously ill and premature babies have to be transferred to Government hospitals at great risk to the babies. May I ask the Acting Minister what his Ministry is doing to ensure that the major private hospitals recognise their responsibility and establish their own neo-natal intensive care units?

Finally, may I ask the Acting Minister what incentives have the Government introduced to encourage private hospitals to upgrade their medical facilities so as to develop Singapore into a Medical Centre of Excellence?

Dr John Chen Seow Phun (Hong Kah GRC): Sir, in formulating our health policy, it is important that we emphasise both the preventive and the curative health care, and strike a balance between the two. Therefore, while we have to ensure that our medical services are good, so that the sick can be cured quickly and that such services are cost-effective and affordable, we must also step up our effort to help more and more people to remain healthy through our preventive health care programme because this is a cheaper and better way of health care.

In this regard, I am happy to note that our preventive health care programme has been effective through the provision of various types of immunisation. The Ministry must therefore continue to ensure that compliance will remain high. We must also improve on our health education pro- gramme. The National Health Fair held last year was a good effort. However, the exhibits were only in the English language and the feedback I received was that many who attended the Fair were the elderly people who could not benefit from the health education messages due to the language problem. The Ministry should therefore ensure that health education messages be in languages best suited to the target audience and review how the health education programmes can be made more effective so that the maximum number of Singaporeans can work at keeping themselves healthy.

Sir, I now come to the curative service, both at the primary and hospital levels. I believe we have generally done a good job in providing primary health care through the polyclinics where a range of services are available at affordable fees. Polyclinics should continue to concentrate on the young, the old and the indigent, and see how they can be better served.

Sir, polyclinics are also well located and easily accessible, but only used in the day time. The Ministry should therefore look into putting them to good use in the evenings. This may help to relieve the load in the A&E departments posed by the non-emergency cases.

The second level of curative service is the hospital care which is admittedly more expensive because it is labour and skill-intensive. However, the Ministry must ensure that hospital care remains affordable for the lower income group. In this respect, the Ministry should look for ways to increase the level of productivity and efficiency in hospitals. One way to reduce the financial impact on patients is to help them recover quicker and spend less days in hospital. Government must also ensure that sufficient C class beds are available at all hospitals and waivers or partial reduction of medical fees are given liberally to those who cannot afford. In this regard, can the Minister provide data on the number of patients who applied for waivers and the number rejected?

Sir, in our effort to restructure and streamline hospital operations, while policy and plans were well thought out, I believe problems are encountered at the implementation level where staff may sometimes get their priorities wrong. There are some concerns that admission to hospitals is now more difficult and patients in class C and B2 wards are receiving a lower level of care in terms of medical attention and courtesy of staff. I hope that if any such complaint is brought to the attention of the Minister, he will ensure that a thorough investigation is carried out and thus ensure that the appropriate level of medical care is given to all, irrespective of class of ward.

To sum up, Sir, the objectives of health care policy should be to keep Singaporeans healthy, and to provide a high level of medical care to the poor and rich alike. We must strive to achieve these objectives.

Mr Chew Heng Ching: Sir, what I proposed to speak on regarding the restructuring of hospitals has actually been largely covered by Members earlier. I shall therefore make my remarks very short.

I want to ask the Minister the progress made to-date regarding the restructuring of hospitals. What are the problems facing the Ministry and to what extent have external factors beyond the control of the Ministry, like the very tight labour market situation and also the concurrent rapid expansion of private hospitals, affected the progress made to-date on government hospital restructuring? And if all these external factors affecting restructuring are overwhelming, may I suggest, as proposed by Dr Arthur Beng and Dr Tan Cheng Bock earlier, that the Ministry consider delaying the restructuring of the remaining hospitals. Keep them as non-restructured hospitals and in this way the public could perhaps compare the level of services and the charges rendered by restructured hospitals and non-restructured hospitals. And in the end, we provide the choice to the public. Let the public decide on which type of hospitals they want to go to.

Encik Abbas Abu Amin (Pasir Panjang GRC): Sir, since many speakers before me have already expressed their concern regarding the redevelopment and restructuring of Government acute hospitals, I would just like to get clarification or assurance from the Minister on two matters.

First, would the interest of the poor patients be safeguarded? For example, will there be enough subsidised beds in these new restructured hospitals and will the fees remain affordable?

The second question is with regard to manpower planning. There is manpower shortage in many areas. With restructuring, those hospitals which can afford to pay will have better staffing ratio. What steps are taken by the Ministry to overcome the problems of shortage of ancillary staff such as physiotherapists, radiographers, laboratory technicians, nurses and even dieticians?

Encik Othman bin Haron Eusofe: Sir, I am also speaking on the restructuring of the Government hospitals and many of the points have been well covered by the previous speakers.

I would like to make one comment only. Some of the speakers have asked for a delay in the restructuring programme. My view is that we should proceed with the restructuring programme. But I think we should make sure that the services which are given to the public, particularly to the poor wage earners, are affordable. The Ministry should try to do their best to retain class C wards in the restructured hospitals. SGH has no class C wards but I think the Minister has said that he will look into this. I hope that he will look into this quickly and introduce class C wards in SGH.

The other point which I want to make is that there has been some feedback which I have received that many people feel that if they want to have good doctors, ie, they want to have the senior consultants, they must go to class A or class A1. Otherwise they would not be treated by them or would not be attended by them, but will only receive the attention of junior doctors or new doctors. Because of this, they want to go into class A and class A1 and as a result, they find problems with paying the fees. They make use of their Medisave too fast. So I want an assurance from the Minister that the senior doctors, senior consultants, would also continue to treat the low income earners, the poor, who are in class B2 and class C.

Mr Chiam See Tong (Potong Pasir): Sir, basically I have two points to bring up. With the restructuring of Government hospitals, this basically means the privatisation of hospitals. Privatisation connotes that the purpose is to make money or to make a profit. Therefore, I have a plea to the Minister that the Government must never think that with privatisation it is given a licence to increase hospital charges as the free market dictates. It must always bear in mind the plight of the poor and the average worker. We know that 70% of Singapore workers earn less than $1,000 gross salary a month. So the majority of Singaporeans are still regarded as not rich. Therefore, the call for the retention of class C must be heeded by the Minister. I would really support the retention of Class C at SGH.

Sir, basically, I think the Minister cannot say that the policy of the Government is to make hospital and medical services affordable. Because what is affordable and what is not affordable is very subjective. But basically the charges must be at a level which can be paid by our average worker.

Sir, the other point is with regard to SGH. I was informed that last year when SGH was privatised, 40% of its experienced staff opted to remain as civil servants. As a result, they were all transferred out when SGH was privatised. If that was true, the SGH will be depleted of experienced staff and its standards will surely drop. I was also told that SGH (Pte) Ltd intends to recruit nurses from the Philippines and from Hong Kong. Why get these foreigners to work in SGH (Pte) Ltd when our own former staff of SGH would be willing to continue to work there? Why is the Government not willing to allow them to work in SGH (Pte) Ltd? Surely there is some kind of arrangement which could be made for these Government servants to be seconded to SGH (Pte) Ltd. They can be working with SGH and still remain Government servants.

Sir, this kind of staff problem will surely be repeated in other Government hospi- tals when they are privatised. Surely one of the principles adopted by the Government must be that those civil servants working in Government hospitals prior to privatisation cannot be put in a worse position when they are privatised. I am thinking particularly of the nurses. I think it is grossly unfair that so many of our nurses should suffer as a result of Government's privatisation programme. I hope the Minister will look into the plight of all those nurses.

The Acting Minister for Health (Mr Yeo Cheow Tong): Mr Speaker, Sir, first, let me thank all my parliamentary colleagues for their views and suggestions. They have touched on many points and they have raised many questions in their very short allotted tune of four minutes. As the delivery of health care is a fairly broad subject, I would like to give Members a brief overview of my Ministry's programmes before replying to the specific points raised.

Sir, good health is essential for a person's well being, as some of the MPs have pointed out. Likewise, our country's future depends on our having a nation of healthy Singaporeans. My Ministry's policies are therefore directed towards helping Singaporeans to remain healthy, and for those who fall ill, to help them to recover as quickly as possible. This is in line with the calls made by MPs this afternoon. With the health care cost rapidly increasing, the saying that prevention is better than cure gains greater weightage with each passing year. The best way for an individual to reduce his expenditure on health care is to reduce his chances of falling ill. This is achieved through a programme of preventive health care and health education.

Immunisation forms a vital component of our preventive health care programme. As Dr John Chen has pointed out, we have a high coverage rate and it is over 95%. And it has allowed us completely to wipe out such diseases as polio, diphtheria and tuberculosis amongst our young. But immunisation alone is not enough. Studies have shown that behaviour and lifestyles such as poor dietary habits, lack of exercise and high risk activities such as smoking can adversely affect a person's health. These are factors which only the individual himself can control.

The health education programme is therefore aimed at making every Singaporean aware of the common health problems and how he or she can avoid them. Armed with the relevant knowledge and information, each person can then be responsible for his own good health. We believe that people are generally sensible and that provided they know how, they would take the necessary actions that will enable them to live a long and healthy life. This is well exemplified by the decline in the number of smokers which dropped from 23% of the population in 1977 to 13% today.

My Ministry will continue its health education and preventive health programmes. We plan to spend about $190 million on such programmes over the next five years. This is a 64% increase over the $115 million spent during the previous five years. However, we recognise that it is not possible for us to totally eliminate diseases. Some people will still fall ill and will require varying degrees of medical care. My Ministry is committed to ensuring that Singaporeans will continue to have good and affordable medical care at both the primary and secondary levels. As pointed out by Dr Tan and several other MPs, the most cost effective way to treat illnesses is at the primary health level. In Singapore, we are fortunate that good primary health care is conveniently available from both the private and the public sectors. The private sector in fact plays a very important role providing about 70% of the primary health care in Singapore.

As a reflection of my Ministry's strong emphasis on primary health care, it has since 1986 been upgrading its primary health facilities and services. The old, inefficient and poorly located clinics are being replaced by new generation polyclinics that offer families a one-stop medical centre for health and medical services. The new generation polyclinics provide, in addition to curative services, health education as well as inexpensive screening programmes for both young and old. We recognise that early identification of such diseases and disease conditions will mean shorter stays in hospital, as pointed out by Dr John Chen, and more importantly, a better chance of recovery.

The new polyclinics will also be key centres for the provision of services to the elderly, such as rehabilitation and day care. The programme for the building of the 10 new polyclinics will be completed in 1994 at a total cost of $66 million. I think it is money well spent because by that time Singaporeans will then be served by a network of 16 modern polyclinics strategically located throughout the island providing an inexpensive and comprehensive range of services.

We also need to provide for those whose medical conditions require them to be hospitalised. Our objective is to have a level of care in Government hospitals that all Singaporeans can be happy and confident about, especially when they fall ill and need to be hospitalised. This means ensuring that our hospitals are properly staffed and equipped and that the doctors and para-medical staff are properly trained and are keeping abreast of developments in medical science and technology. We must also be able to retain the better specialists as our hospitals also participate in the training of our future doctors and specialists. In this way, Singaporeans can be assured of a high standard of medical care.

As pointed out by many MPs, unfortunately, hospitals are very expensive institutions to run. The cost of providing hospital services has been increasing rapidly in every country. Over the last few years health care cost has been increasing by about 13% annually in the USA, 16% in UK and 12% in Australia. In Singapore, Government health expenditure has been increasing at an average rate of about 12% a year over the last decade. At this rate, medical expenditures double every six years. It is inevitable that hospital costs will continue to increase. This is because hospitals are not only labour intensive, but they also require staff who are highly specialised and well trained. Manpower costs therefore make up 70% of hospital expenditures.

With our tight labour market and strong competition from other employment sectors, salaries of hospital staff must inevitably increase. If hospitals do not or are unable to pay competitive salaries, they will not be able to retain their existing staff and, worse, will not be able to attract new job applicants. This is what has happened in our Government hospitals over the past five to 10 years. We will therefore end up being short of nurses, therapists, counter clerks and other key staff. Standards of hospital service will go down and this will be to the detriment of all patients, especially poorer patients, who are unable to seek private sector treatment.

Sir, previously the Government revised hospital fees across the board every four to five years. These infrequent increases meant that each adjustment had to be large and disturbing. From now on, Government and restructured hospitals will adjust fees more regularly in order to keep the increases smaller. They will also itemise more of the non-routine services and procedures so that only those who need these services will pay for them. This will be fairer to all patients.

The Ministry of health has always heavily subsidized hospital treatment. It will continue to do so. The Government will maintain the amount of subsidy granted to Government and restructured hospitals as a percentage of our GDP. As salaries grow and medical costs increase, this subsidy will go up. However, the subsidy cannot be expected to cover the entire increase of hospital cost year after year. Hospitals will therefore have to raise fees periodically in order to recover costs and maintain their level of service. The majority of Singaporeans who are covered by Medisave will have no difficulty in paying their hospital bills. For the minority who cannot pay, the Government will continue to be very liberal in waiving their hospital bills.

The Government is committed to ensuring that basic medical treatment will always remain affordable for all citizens. No Singaporeans will ever be deprived of hospital care purely because of lack of funds. The hospitals will always have adequate numbers of B2 and C class beds. This will apply to all hospitals even after they are redeveloped in the next four to five years.

Since the amount of money available to subsidize health care is limited, we should ensure that our subsidies are concentrated only on those who need to be assisted, ie, those patients in the B2 and C class wards. The subsidies on A and B1 wards will be reduced and eventually eliminated. It is only fair that those who prefer the privacy and comfort of these wards bear the full cost of the services that they use.

Sir, as I have stated earlier, it is inevitable that hospital cost will continue to go up. The challenge is how to maintain a high standard of hospital service and at the same time keep future cost increases as low as possible. The answer, again as many MPs have pointed out, is to ensure that our hospitals are operated more efficiently and more cost effectively. Hospitals are large and complex organisations, each with between 2,000 and 4,000 employees. They operate a wide range of sophisticated equipment and offer a vast range of services. They serve thousands of patients daily, each with a different problem, each anxious for a quick service that is efficient and effective. And yet as Government hospitals, they are subjected to detailed centralised control by both the Ministries of Health and Finance. They have limited management and operational flexibility and are therefore not fully accountable for their operational results. It is therefore to the credit of the management and staff of the Government hospitals that despite such constraints they have managed to maintain such a high standard of care and to make such significant progress over the years.

However, I have no doubt at all that if they had been given operational and management flexibility and autonomy, their results would have been even better. It is with this objective in mind that the Government has proceeded to restructure some of its hospitals and to allow them to operate autonomously. They will then be able to develop innovative, efficient, and cost effective systems and procedures, be able to develop more effective management systems in order to enhance the efficiency and productivity of their organisations. They will be able to be more responsive to patient's needs and therefore to provide a better level of service, and very importantly, they will be able to recruit, to motivate and to retain their staff with better personnel management policies. However, there have been fears that the poor will be adversely affected by the restructuring programme. Let me assure Members that the restructured hospitals, while they have operational and management autonomy, are still required to comply with the Government's policy of ensuring that the poor will always have access to proper medical care.

Let me conclude by giving Members two key indicators of our overall state of health. In 1960, our infant mortality rate was 35 per 1,000 live births. Today, it is below 7 per 1,000, one of the lowest in the world. We rank on par with countries like Canada, Switzerland and are in fact ahead and better than many of the developed countries, such as USA and UK. Our life expectancy in 1960 was 63 years. Today, it is 74 years, an increase of 11 years. Again we compare very well against the developed countries whose life expectancy averages 74 to 75 years.

Sir, these are remarkable achievements by any standard. All Singaporeans, rich and poor alike, have benefited from the progress made in our medical and health services. It is something which we can all be proud about. The figures show that although our overall expenditure on health care may be low in comparison with the developed countries, our people are able to enjoy a level of care that is at least equal, if not better, than that of the developed countries. They demonstrate that we are indeed getting good value for our money.

Sir, many Members have asked about the level of subsidies and whether our hospital care and medical services are affordable. Sir, it is right that we show great concern for the poor. The Government does show great concern for the poor in making sure that our medical services are affordable. However, we also must ensure that the limited subsidies that we have are spent on the poor and not on those who prefer the highly personalised and comfort of the A and B1 classes.

Sir, in terms of subsidies, Dr Ow Chin Hock had pointed out that subsidies had in fact increased over the years. He is right. Many MPs have questioned that and I would like to give Members some figures. In 1980, our subsidy per capita for health care was only $68 per year. In 1985, it was $114. Today, our subsidy is $134 per capita. In terms of B2 and C class patients, the subsidy has in fact doubled for B2, from $40 million in 1985 to $84 million last year. For C class, the subsidy has reduced in quantum and that is because of the dramatic decline in C class admission rates. But the level of subsidies for C class patients remains high at 80%. That means C class patients pay on the average only 20% of what it costs the Government to provide that service to them.

Let me give Members some examples of the subsidies to the patients. For B2 patients, the average bill size is $410. However, it costs the Government $1,320 to care for each B2 patient. The subsidy is therefore $910 out of the total bill of $1,320. For C class, the patient bill size for 1989 was $205. This is about half the bill size of the B2 patients. However, the subsidy is $815, giving a subsidy rate of about 80%. So the services for our B2 and C class patients are heavily subsidized. The question is whether they are heavy enough and whether the C class bills and B2 bills are affordable. In term of the C class bill, if we look at the 75th percentile bill, the quantum is $220. That means 75% of all class C patients face a bill of less than $220. Is this figure affordable or not?

Sir, for those with Medisave balances, for a worker with $600 income a month, or a family income level of $600 a month, this only represents six months of Medisave contributions. For those families without Medisave (self-employed or business proprietors), they only need to put aside $4 per month between the age of 20 and 50 years. This will ensure that they will have enough money to go into a C class ward at any time. For those who prefer a little bit more privacy and who get admitted into the B2 wards, the 75th percentile bill is about $480. This represents, for a patient with an income level of about $800 a month, Medisave contributions of 10 months. So 75% of all B2 class patients will be able to re-top up their Medisave accounts in less than 10 months.

What about waivers and remissions? Patients who cannot afford such low bills can still apply for waivers and remissions. In 1989, the first nine months of our financial year 1989, which is April to December, the total number of bills waived was 564 for inpatients in our hospitals. This includes NUH and SGH. Sir, this represents only 0.4% of all B2 and C class patients. So you can assume that less than 1% of patients in C class and B2 wards cannot even afford the low fees that are being charged. They apply for waivers and we have been very liberal in granting them waivers.

Dr Wan Soon Bee has asked whether we have been too strict, and that is why the numbers are low. Sir, a total of 1,057 patients applied for waivers. This is for both outpatient and inpatient care in 1989 (April to December 1989). Out of that 1,057, only 15 were rejected. They were rejected because their family income was substantial enough for them to afford the small bills that they were facing, and we allow them in that case to pay by instalments, if need be. The number of rejected applications is extremely small - 1.5%. So it is not that we are not catching those people who need to be helped. The applications are there, and we have been very liberal in granting them waivers of fees.

In terms of the Medisave accounts, for those patients in B2 and C class, whose Medisave accounts have been depleted, they can even apply to overdraw on their Medisave accounts. That means, Medisave will give them an overdraft which they can then repay through their monthly contributions. In 1989, only nine patients applied to overdraw on their Medisave accounts. Again, it shows that most Singaporeans have more than enough in their Medisave for B2 and C class bills.

Sir, many MPs have raised their concerns that B2 and C class patients may not be able to get the appropriate level of care. This is because they fear that specialists will only look after the patients in the A and B1 class wards, as they can earn consultancy fees there. Whereas if they treat the C class patients, they do not earn consultancy fees.

First, let me explain the structure of each medical or surgical department in a hospital, because I think it is necessary for Members to know this in order to understand why these fears are unfounded. Each unit or department comprises doctors who are non-specialists as well as doctors who are specialists, such as Senior Registrars and consultants, and the unit is then headed by a Senior Consultant. Every patient who is admitted into a B2 or C class ward becomes the responsibility of the consultant in charge of that ward. The consultant will then review the case and assign a doctor of a level appropriate to the medical condition of that patient. And not only that, he is also responsible for supervising and monitoring the management of that patient. If a patient has a specific condition which can be handled only by a consultant, he will then be managed by a consultant who is assigned by the consultant in charge or the Senior Consultant himself will handle the case personally. This ensures that the specialist resources of each department are optimally utilised for the benefit of every patient.

Sir, as pointed out by Mr Peh Chin Hua, it is not possible for all patients to be allowed to choose their own specialists. This is because everyone will naturally in the course of his admission choose the most senior doctor. The result would only be a long queue for this limited number of doctors. The queue may stretch to months, maybe even years, in which case only those whose conditions are very minor can afford to wait, whilst those whose conditions are very serious will not be able to wait and will have to be treated by very junior people. This, I am sure, Members will agree, will be to the disadvantage of all patients.

Sir, we have built-in safeguards also to ensure that the specialists are not concentrating only on the patients in the A and B1 wards. Many Members have asked how we are doing that. We ensure that every specialist is spending seven out of the 11 sessions that he has each week on patients in the subsidised wards, and this means that two-thirds of each specialist's time is actually allocated to servicing subsidised patients, poor patients in B2 and C wards. And we monitor very closely for compliance, both at the hospital level as well as at the Ministry level.

Let me give Members three examples to show that this system is working. All operations are listed into seven tables of operations, according to their degree of complexity. Table 7 lists all those operations which are the most complicated, and the simplest are in Table 1. Operations under Tables 5 to 7, being the most complicated, can only be performed by senior staff such as Senior Registrars and above.

The three examples I will be quoting have been investigated and they show that these operations have all been carried out by such senior staff. The first example is coronary artery bypass. Last year, in SGH and NUH, there were 634 such operations under Tables 5 to 7. Of these operations, 232 or 37% were B2 or C class patients. So even though they were B2 and C class patients, they were still seen by this senior team of doctors.

In Neurosurgery, Tan Tock Seng Hospital last year carried out 567 operations under this group of tables. Of these operations, 73% were on patients who were either in B2 or class C wards. So again, in this case, the majority were in the subsidised wards and they were also operated on by senior staff.

Sir, in the area of paediatric surgery, there is a big range of such cases. So we only pick those in Tables 5 to 7. Last year, out of the 114 operations carried out in SGH, 54% were on patients in the B2 class (subsidised patients). The figures show quite clearly that for the more complicated cases, B2 and C class patients are managed by the same specialists as those treating patients in the A and B1 wards. Members can therefore be assured that patients in B2 and C class wards are always given the level of medical care and attention appropriate to their condition.

Sir, I now go to the specific points raised by each of the Members.

The Member for Tampines GRC and GPC Chairman, Dr Aline Wong, raised quite a few points. She had asked about the development expenditure and recurrent subventions that have been granted to our restructured hospitals, namely, NUH and SGH, and she asked what these subventions are for. Sir, these subventions are only for service and for the equipment that are used in treating patients in the subsidised wards, namely, B2. The Ministry of Finance and the Ministry of Health have been very careful in vetting the requests put forward by the restructured hospitals to ensure that these subventions are spent in a proper manner, that is, they are spent in treating the lower-income group and not used for upgrading services for patients in the A or B1 wards, as Dr Aline Wong has feared. There is a clear distinction. And this is the advantage of having a commercial accounting system, a proper accounting system, in the hospitals. For the first time in the restructured hospitals, we are now able to cost what is spent on patients in each area, whether they are subsidised or whether they are in the A and B1 wards, and therefore we can identify what it costs, what the patients are paying and how much we should be subventing the hospitals.

She also asked that Medisave be safeguarded in order to avoid over-usage by the account holders. Sir, we have safeguards now, and that is, for patients in the restructured hospitals as well as private hospitals, there is a limit of $300 per day that they can utilise from their Medisave to pay for the ward charges and for the doctor's fees. Over and above that, they can claim a reimbursement from Medisave for the operations that have been carried out. This sets an effective quantum that can be utilized. The average length of stay for most patients varies from five to six days, resulting in a Medisave reimbursement for ward charges of $1,800 for A class patient. That is the amount that he can claim from Medisave, and he will have to pay the balance in cash. Similarly for operations, there is a limit. I think the limit is about $4,600 for the most complicated operation. Therefore, the safeguards are there and so far, they have been quite effective in ensuring that there is no over-usage by patients who go into the better class wards.

The Chairman: Order. Moment of interruption.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Yeo Cheow Tong: Mr Speaker, Sir, I beg to report that the Committee of Supply has made further progress on the Main and Development Estimates for the financial year 1990/91, and ask leave to sit again tomorrow.

Mr Speaker: So be it.